Q3 2024 PepsiCo Inc Earnings Call - Q&A

October 8, 2024

Turning to ask the question today's call is being recorded and will be archived at www Dot Pepsico Dot com. It is now my pleasure to introduce Mr. Ravi <unk> Senior Vice President of Investor Relations. Mr. <unk> you may begin.

We pay them the only senior Vice President of Investor Relations. Mr. <unk> you may begin.

Speaker Change: Thank you Kevin and good morning, everyone. I hope everyone has had a chance. This morning to review our press release and prepared remarks, both of which are available on our website before.

Ravi <unk>: Thank you Kevin and good morning, everyone. I hope everyone has had a chance. This morning to review our press release and prepared remarks, both of which are available on our website.

Before we begin please take note of our cautionary statement, we may make forward looking statements on today's call, including about our business plans and updated 2020 for guidance.

Speaker Change: Before we begin please take note of our cautionary statement.

Speaker Change: We may make forward looking statements on today's call, including about our business plans and updated 2020 for guidance.

Speaker Change: Forward looking statements inherently involve risks and uncertainties and only reflect our view as of today October 8th 2024, and we are under no obligation to update when discussing our results we refer to non-GAAP measures, which exclude certain items from reported results.

Speaker Change: Please refer to our third quarter 2024 earnings release, and third quarter 2020 for Form 10-Q available on Pepsico Dot com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward looking.

Speaker Change: <unk> joining.

Ramon <unk>: Joining me today are pepsico's, chairman and CEO, Ramon <unk>, and Pepsico's Executive Vice President and CFO, Jamie Caulfield we.

Speaker Change: <unk>.

Ramon <unk>: Joining me today are pepsico's, chairman and CEO, Ramon <unk>, and Pepsico's Executive Vice President and CFO, Jamie Caulfield.

Speaker Change: We ask that you please limit yourself to one question and with that I will turn it over to the operator for the first question.

Speaker Change: In order to ask a question or make a comment. Please press star followed by one on your Touchtone phone, we will pause for a moment, while we compile the Q&A roster.

Speaker Change: In order to ask a question or make a comment. Please press star followed by one one on your Touchtone phone, we will pause for a moment, while we compile the Q&A roster. Our first question comes from Lauren Lieberman with Barclays. Your line is open.

Lauren Lieberman: Our first question comes from Lauren Lieberman with Barclays. Your line is open.

Lauren Lieberman: Thanks, Good morning, everyone.

Lauren Lieberman: So in the release clear that Frito volumes trended in the right direction in the third quarter category backdrop is still tough and you offered a lot of detail in the prepared remarks.

Thanks, Good morning, everyone. So in the release clear that Frito volumes trended in the right direction in the third quarter category backdrop is still tough and you offered a lot of detail in the prepared remarks on kind of the strategy from here.

Speaker Change: <unk> from here.

Speaker Change: I wanted to maybe think about the.

Speaker Change: The building blocks to a return to volume growth for that business and if we isolated between let's say core lease and some of the promotional work that you started this summer the expansion efforts really focused on kind of multicultural offerings and value offerings and then the positive choice.

Lauren Lieberman: Wanted to maybe think about the building blocks to a return to volume growth for that business and if we isolate it between let's say core lease and some of the promotional work that you started this summer.

Lauren Lieberman: The expansion efforts are you focused on multicultural offerings and value offerings and then the positive choice.

More premium end of the spectrum as we think about the path forward.

Speaker Change: What do you think about the growth rates for those three if you will segments or initiatives do we think that long term lease gets back to in that kind of core part of the business to be a positive volume contributor or is it more of a.

Lauren Lieberman: More premium end of the spectrum as we think about the path forward.

Speaker Change: Or do you think about the growth rates for those three if you will segments or initiatives do we think that long term lease gets back to in that kind of a core part of the business to be a positive volume contributor or is it more of a you know kind of hold the line and avoid losses there, but the other two are really what drives the turnaround as we move.

Speaker Change: What kind of hold the line and avoid losses there, but the other two are really what drives the turnaround as we move forward. Thanks.

Lauren Lieberman: Good morning, Lauren Thank you.

Lauren Lieberman: Let me step back for a minute.

Lauren Lieberman: Forward. Thanks.

Speaker Change: If we think about the long term growth potential of the <unk>.

Lauren Lieberman: Good morning, Lauren Thank you.

Speaker Change: Let me step back for a minute.

Speaker Change: <unk> business in the U S.

If we think about the long term growth potential of the <unk>.

Speaker Change: We are very positive about the long term trends we've seen Gen Z.

Business in the U S.

Speaker Change: Snacking patterns and food patterns.

Speaker Change: We are very positive about the long term trends we've seen Gen Z.

Speaker Change: In a way that favor the growth of our category. There are snacking more they're eating mini meals versus large meals and that favors our brands and the number of locations that the carrier.

Speaker Change: Snacking patterns and food patterns.

Speaker Change: Long term, we feel very good about it after three years of.

Speaker Change: Outsize growth for Frito, if you think about the double digit growth. We knew this year was going to be a year of normalization and that's what's happening in the consumer is.

Speaker Change: Outsize growth for Frito, if you think about the double digit growth. We knew this year was going to be a year of normalization and that's what's happened and the consumer is.

Speaker Change: Reassessing patterns and with mobility and some of the financial situation now going forward within that the category will continue to grow at the pays off of the past because of the long term trends that I referred to now the way, we're thinking about our brands play in that space, but data.

Reassessing patterns and with mobility and some of the financial situation now going forward. We've seen that the category will continue to grow at the pays off of the past because of the long term trends that I referred to now the way, we're thinking about our brands play in that space, but data.

Speaker Change: <unk> will continue to be a big driver of the growth and we're looking at potato chips to your question of lais as a multi tier opportunity and the same with theme for all of the other segments. So we have less clearly is the main main part of the category and within days, we will have.

Speaker Change: <unk> will continue to be a big driver of the growth and we're looking at potato chips to your question of lais as a multi tier opportunity and the same we see them for all the other segments. So we have less clearly is the main main part of the category and within days, we will have.

On salt it and we will have flavors, where we know we can create a lot of loyalty and higher value for our consumers will have sub segments like lightly salted or baked that provide even more permissible options for our consumers to stay in potatoes, and they will have.

Speaker Change: Unsalted and will have flavors, where we know we can create a lot of loyalty and higher value for our consumers will have sub segments like lightly salted or base that provide even more permissible options for our consumers to stay in potatoes, and they will have.

Speaker Change: The upper end of the category brands like Ms. Vicki is that provide a more premium experience. So we're thinking about each one of those categories is multi tier where we offer value to some consumers more specific.

Speaker Change: Choices for other consumers that want to stay within our brands, but the overarching.

Speaker Change: Sure.

Speaker Change: Choices for other consumers that want to stay within our brands, but the overarching.

Speaker Change: They were thinking about the category is to continue to create growth continue to ensure that the long term the category creates occasions and brings consumers into bringing consumers into the category with our brand programs, our innovation to keep that category growing very healthy and the future for us and for our customers.

Speaker Change: The way, we're thinking about the category is to continue to create growth continue to ensure that the long term that category creates occasions and brings consumers into we're bringing consumers into the category with our brand programs, our innovation to the category growing very healthy and the future for us and for.

Speaker Change: And that's how you should think about the long term value that we can create with the frito lay business.

Speaker Change: Our customers and Thats, how you should think about the long term value that we can create with the frito lay business.

Speaker Change: Thank you one moment for our next question.

Unsalted and will have flavors, where we know we can create a lot of loyalty and higher value for our consumers will have sub segments like lightly salted or baked that provide even more permissible options for consumers to stay put date us and then we will have.

Speaker Change: Thank you one moment for our next question.

Bryan Spillane: Our next question comes from Bryan Spillane with Bofa. Your line is open.

Bryan Spillane: Thanks, operator, good morning, everyone.

Bryan Spillane: Our next question comes from Bryan Spillane with Bofa. Your line is open.

Bryan Spillane: So my question is just how we're approaching planning for I guess 25, and maybe just the medium term and remote I guess underneath my question is.

Bryan Spillane: Thanks, operator, good morning, everyone.

The upper end of the category brands like Ms. Vicki is that provide a more premium experience. So we're thinking about each one of those categories is multi tier where we offer value to some consumers more specific.

Bryan Spillane: So my question is just how we're approaching planning for I guess 25, and maybe just the medium term and remote I guess underneath my question is.

Speaker Change: Given that this is sort of in some ways uncharted water in terms of the what we're dealing with the consumer and finding ways to get them to respond.

Choices for other consumers that want to stay within our brands, but the overarching.

Speaker Change: How is it affecting the way youre thinking about the balance right between investment.

Speaker Change: Spending to stimulate demand returns and how it affects the bottom line and I guess.

The way, we're thinking about the category is to continue to create growth continue to ensure that the long term that category creates occasions and brings consumers into we're bringing consumers into the category with our brand programs, our innovation to keep that category growing very healthy and the future for us.

Speaker Change: How is it affecting the way youre thinking about the balance right between investment.

Really.

Spending to stimulate demand returns and how it affects the bottom line and I guess.

Speaker Change: What I'm asking is.

Speaker Change: How do you gauge or guard against cutting too much cost in order to preserve the bottom line.

Speaker Change: Really.

Speaker Change: What I'm asking is.

Speaker Change: How do you gauge or guard against cutting too much cost in order to preserve the bottom line.

Speaker Change: While trying to.

We accelerated topline growth yes.

For our customers and Thats, how you should think about the long term value that we can create with the frito lay business.

Bryan Spillane: Yes, great question Brian.

Speaker Change: We've been we've been thinking about productivity and cost transformation now for some time, we knew it was going to be a year of normalization after.

Speaker Change: All trying to.

Speaker Change: We accelerate top line growth.

Thank you one moment for our next question.

Bryan Spillane: Yes, great question Brian.

We've been we've been thinking about productivity and cost transformation now for some time, we knew it wasn't going to be a year of normalization. After as I said three years of outsized growth. So we've been thinking about productivity in a very pragmatic way in systemic way across the company and there are some big.

Our next question comes from Bryan Spillane with Bofa. Your line is open.

Speaker Change: Three years of outsized growth, so we've been thinking about productivity.

Thanks, operator, good morning, everyone.

Speaker Change: A very programmatic way in systemic way across the company and there are some big platforms that we have started to deploy and we will continue to deploy over the next few years and these platforms are automation of our of our supply chain, both warehouses manufacturing distribution centers.

So my question is just how we're approaching planning for I guess 25, and maybe just the medium term and remote I guess underneath my question is.

Speaker Change: The platforms that we have started to deploy and we will continue to deploy over the next few years and these platforms are automation of our of our supply chain, both warehouses manufacturing distribution centers.

Given that this is sort of in some ways uncharted water in terms of the what we're dealing with the consumer and finding ways to get them to respond.

Speaker Change: We have invested a lot in data and organizing our data in a way that now we can deploy digitalization at scale throughout the value chain. So from the way we procure to the way we run our factories to our transportation to our go to markets, where really digitalized in the company and that will generate growth and productivity.

How is it affecting the way youre thinking about the balance right between investment.

Speaker Change: We have invested a lot in data and organizing our data in a way that now we can deploy digitalization at scale throughout the value chain. So from the way we procure to the way we run our factories to our transportation to our go to market, we're really digitalize, the company and that will generate growth and productivity.

Spending to stimulate demand returns and how it affects the bottom line and I guess.

Really what I am.

Asking is.

How do you gauge or guard against cutting too much cost in order to preserve the bottom line.

Speaker Change: <unk> is well, we invested which started to create our global business services.

Speaker Change: Shared services now we call them global capability to centers about a couple of years ago. Now we have we have them on at a maturity level that we can use them much more in how we do labor across the company again with how we service our organization.

Speaker Change: <unk> is well, we invested which started to create our global business services.

While trying to.

We accelerated topline growth.

Yes, great question Brian.

We've been we've been thinking about productivity and cost transformation now for some time, we knew it was going to be a year of normalization. After as I said three years of outsized growth. So we've been thinking about productivity in a very programmatic way on systemic way across the company and there is.

Speaker Change: Optimization on in general demand generation budget optimization, we are much better at.

M optimization in general demand generation budget optimization, we are much better at understanding otherwise so theres multiple.

Speaker Change: Standing Rois, so theres multiple.

Speaker Change: Flat firms of productivity that will keep deployed in the next few years in the U S and internationally that will give us the optionality to invest in the business as we see best too.

Some big platforms that we have started to deploy and we will continue to deploy over the next few years and these platforms are automation of our of our supply chain.

Flat firms of productivity that will keep deployed in the next few years in the U S and internationally that will give us the optionality to invest in the business as we see best too.

Warehouses manufacturing distribution centers.

Speaker Change: Continue to grow our categories in a responsible way and continue to deliver the financial returns that our investors expect.

We have invested a lot in data and organizing our data in a way that now we can deploy digitalization at scale throughout the value chain. So from the way we procure to the way we run our factories to our transportation to our go to market, we're really digitalize, the company and that will generate growth and productivity.

Speaker Change: Continue to grow our categories in a responsible way and continue to deliver the financial returns that our investors expect.

Speaker Change: And we are delivering.

Speaker Change: One good we feel good about this year in the sense that even with a very challenging consumer background, we're able to deliver at the high end of our EPS long term target that is a very positive and it makes us feel very confident that the productivity the cost transformation programs that will start.

Speaker Change: And then we are going away.

<unk> is well, we invested which started to create our global business services.

<unk> services now we call them global capability to centers about a couple of years ago. Now we have we have them on at a maturity level that we can use them much more in how we do labor across the company again with how we service our organization.

Speaker Change: With the right levels of investment will deliver for US again, we're always managing the company for the long term even in a year like this where challenge on the topline we keep investing in A&M, we keep investing in the long term transformation of the company, we keep investing in sustainability and making sure that long term.

Speaker Change: With the right levels of investment will deliver for US again, we're always managing the company for the long term even in a year like this where.

Optimization on in general demand generation budget optimization, we are much better at understanding rois, So theres multiple.

Speaker Change: Challenge on the topline we keep investing in A&M, we keep investing in the long term transformation of the company, we keep investing in sustainability and making sure that long term, we're using less resources. So we're not taking our eyes off the ball on the long term was we deliver on the short term for our investors.

Speaker Change: And where we are using less resources. So we're not taking our eyes off the ball on the long term was we deliver on the short term for our investors. Thanks.

Platforms of productivity that will keep deployed in the next few years in the U S and internationally that will give us the optionality to invest in the business as we see best too.

Thanks to what I think is best in class productivity multi prone program that will continue to deploy in the coming years.

Speaker Change: Thanks to what I think is best in class productivity multi prone program that will continue to deploy in the coming years.

Continue to grow our categories in a responsible way and continue to deliver the financial returns that our investors expect and that we are delivering.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Okay.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Camino Rojo wallet with Jefferies. Your line is open.

One good we feel good about this year in the sense that even with a very challenging consumer background, we're able to deliver at the high end of our EPS long term target that is a very positive and it makes us feel very confident that the productivity the cost transformation programs that we started.

Yeah.

Speaker Change: Hey, guys. Good morning, if I could just follow up on that with.

Our next question comes from Camilo drugs are wildly with Jefferies. Your line is open.

Speaker Change: Other than the details if organic revenue growth does indeed stay in the sort of low single digit or 1% range can you still deliver 8% on EPS kind of putting all of that together do you have the flexibility to do that for the forward year.

Hey, guys. Good morning, if I could just follow up on that.

Speaker Change: With.

Other than the details if organic revenue growth does indeed stay in the sort of low single digit 1% range can you still deliver 8% on EPS kind of putting all of that together do you have the flexibility to do that for the forward year.

With the right levels of investment will deliver for US again, we're always managing the company for the long term even in a year like this where challenge on the topline we keep investing in A&M, we keep investing in the long term transformation of the company, we keep investing in sustainability and making sure that long term.

Speaker Change: Camille as I said earlier I think we have.

Speaker Change: A very large productivity.

Speaker Change: Camille as I said earlier I think we have.

Speaker Change: Set of tools that will keep deploying systematically at the same time, we then seeing our category will grow at a 1% long term, we think our category with investments that we are putting back into the business.

Speaker Change: A very large productivity.

Speaker Change: Set of tools that will keep deploying systematically at the same time, we don't think our category will grow at a 1% long term, we think our category with investments that we are putting back into the business and the health of our brands and the innovation that we have in place for these year end next year.

Where we are using less resources. So we're not taking our eyes off the ball on the long term was we deliver on the short term for our investors.

Speaker Change: The health of our brands and the innovation that we have in place for this year at next year, we will deliver much more than 1%. So we're not considering that scenario in our in our in our in our kind of planning, but I would say what do we want to do is control what we can control, which is clearly focused on.

Thanks to what I think is best in class productivity multi prone program that will continue to deploy in the coming years.

Speaker Change: We will deliver much more than 1%, so we're not considering that scenario.

Thank you one moment for our next question.

Speaker Change: Our in our.

Speaker Change: In our kind of planning.

Okay.

Productivity focusing on the long term health of our category continued to keep our consumers in our brands continued to keep our consumers in our categories building, winning plans with our partners that generate profitable growth for for both of US that's where we're putting the focus long term.

Speaker Change: I would say what do we want to do is control what we can control, which is clearly focus on productivity focusing on the long term health of our category continued to keep our consumers in our brands continued to keep our consumers in our categories building, winning plans with our partners that generate profitable.

Our next question comes from Camino Rojo wildly with Jefferies. Your line is open.

Hey, guys good morning.

Just to follow up on that.

Uh huh.

Other than the details if organic revenue growth does indeed stay in the sort of low single digit or 1% range can you still deliver 8% on EPS kind of putting all of that together do you have the flexibility to do that for the forward year.

Speaker Change: <unk> said earlier, we believe in the long term growth of both our snacks category on our beverage category both of them are trillion dollar.

Speaker Change: Both for for both of US, that's where we're putting the <unk> long term as I said earlier, we believe in the long term growth of both our snacks category on our beverage category both of them are.

Camille as I said earlier I think we have.

Speaker Change: Type of categories with global relevance growing very healthy in many markets around the world and with long term trends that give us a lot of confidence that these will be.

A very large productivity.

Speaker Change: <unk>.

Set of tools that will keep deploying systematically at the same time, we don't think our category. It will grow at a 1% long term, we think our category with investments that we are putting back into the business and the health of our brands and the innovation that we have in place for these year at next year.

Speaker Change: Type of categories with global relevance growing very healthy in many markets around the world and with long term trends that gave us a lot of confidence that these will be.

Speaker Change: Sizable growth categories for us.

Speaker Change: The long term.

Speaker Change: Thank you one moment for our next question.

Speaker Change: No.

Speaker Change: Sizable growth categories for the long term.

Dara <unk>: Our next question comes from Dara <unk> with Morgan Stanley. Your line is open.

Speaker Change: Thank you one moment for our next question.

We will deliver much more than 1%. So we're not considering that scenario in our in our in our in our kind of planning that.

Speaker Change: Okay.

Dara <unk>: Hey, good morning.

Dara <unk>: Our next question comes from Dara <unk> with Morgan Stanley. Your line is open.

Dara <unk>: Good morning.

Dara <unk>: So.

Dara <unk>: Ramon you touched on earlier in the prepared remarks, some of the actions you've taken so far in Frito lay just can you take a step back and.

I would say what do we want to do is control what we can control, which is clearly focus on productivity focusing on the long term health of our category continued to keep our consumers in our brands continued to keep our consumers in our categories building, winning plans with our partners that generate profitable growth.

Dara <unk>: Hey, good morning good.

Dara <unk>: Good morning.

Dara <unk>: So.

Speaker Change: You touched on earlier in the prepared remarks, some of the actions you've taken so far in Frito lay just can you take a step back and.

Give us your view in terms of the initial payback youre seeing but.

Speaker Change: The thrust of the question is really more about going forward is it sort of tweaking those actions in place already to drive greater payoff going forward are there additional actions youre going to lean heavier on and just how do you think about sort of changing the magnitude of the investment behind some of those and maybe specifically you can dial down.

Speaker Change: Give us your view in terms of the initial payback youre seeing but.

For for both of US, that's where we're putting the focus long term.

As I said earlier, we believe in the long term growth of both our snacks category on our beverage category both of them are trillion dollar type.

Speaker Change: How do you think about sort of changing the magnitude of the investment behind some of those and maybe specifically you can dial down on providing value to consumers that you mentioned.

Speaker Change: One on providing value to consumers that you mentioned.

Type of categories with global relevance growing very healthy in many markets around the world and with long term trends that give us a lot of confidence that these will be.

Speaker Change: It is that sort of mean as that more of a promotional focus is it taking less pricing.

Speaker Change: Give us a little more tangible detail on that front. Thanks.

Speaker Change: What it is that sort of mean as that more of a promotional focus is it taking less pricing.

Sizable growth categories for the long term.

Speaker Change: Great. Thank you.

Speaker Change: Give us a little more tangible detail on that front. Thanks.

Speaker Change: I think it's a multi prone.

Thank you one moment for our next question.

Speaker Change:

Strategy and that we will continue with that so giving more value on the car is super relevant we feel good about the investments that we put this summer mostly behind the potato chips category and lays that drove.

Lisa: Thank you Lisa.

Speaker Change: I think it is a multi prone.

Our next question comes from Dara <unk> with Morgan Stanley. Your line is open.

Lisa:

Speaker Change: Strategy and that will continue with that so giving more value on the car is super relevant we feel good about the investments that we put this summer mosley behind the potato chip category and lays that drove.

Okay.

Hey, good morning.

Good morning.

So.

You touched on earlier in the prepared remarks, some of the actions you've taken so far in Frito lay just can you take a step back and.

Speaker Change: Growth in the potato chips business.

Speaker Change: <unk> gained three points of household penetration and we feel good about that return now we're going to apply that sequentially to other categories. We will use the fall or the winter season.

Speaker Change: Growth in the potato chips business.

Give us your view in terms of the initial payback youre seeing but.

The thrust of the question is really more about going forward is it sort of tweaking those actions in place already to drive greater payoff going forward are there additional actions youre going to lean heavier on <unk>.

Speaker Change: To put more investments behind the readers and tostitos as the football season, there's a lot of gas.

Speaker Change: To put more investments behind the Redoes and Tostitos as the football season, there's a lot of.

Speaker Change: Gathering and those brands below them very well in those gathering so it will be a combination of value in the form of bonus bags and more product to obviously these are large normally large group gathering so <unk> make a lot of sense, we're giving 20% more product and tostitos on Russell.

Just how do you think about sort of changing the magnitude of investment behind some of those and maybe specifically you can dial down on providing value to consumers that you mentioned.

Speaker Change: Gatherings in those brands, we launched very well in those gathering so on it will be a combination of value in the form of bonus bags and more product to obviously these are large normally large group gathering so vantage box makes a lot of sense, we're giving 20% more product and tostitos on Russell.

It is that sort of mean as that more of a promotional focus is it taking less pricing.

Speaker Change: All of the brands that belong in those locations.

Give us a little more tangible detail on that front. Thanks.

Speaker Change: It also.

Speaker Change: Investing in brand event so.

Thank you Lisa.

Speaker Change: You will see Tostitos doritos.

Speaker Change: Some of the brands that belong in those locations. We're also investing in brand event. So.

I think it's a multi prone.

Speaker Change: A big brand events around NFL will see lays.

Strategy and that will continue with that so giving more value on the car is super relevant we feel good about the investments that we put this summer mostly behind the potato chips category and lays that drove.

Speaker Change: You will see Tostitos under Redoes.

Speaker Change: Playing some of the classic do us a flavor event. So the brands will have a combination of value and.

Speaker Change: A big brand events around NFL will see lays.

Speaker Change: Playing some of the classic do us a flavor event. So the brands will have a combination of value and.

Speaker Change: And big brand events at the same time, we're working on the long term ever.

Growth in the potato chips business.

Speaker Change: Evolution of the portfolio and that is something that we've been working for many many years. We will continue I think as the success of our of our business long term is based on evolving the portfolio at the speed that the consumer wants to go. So we will continue to invest on our permissible portfolio. This is this is growing very fast and we continue to.

Speaker Change: And big brand events at the same time, we're working on the long term.

<unk> gained three points of household penetration and we feel good about that return now we are going to apply that sequentially to other categories. We will use the fall or the winter season.

Speaker Change: Evolution of the portfolio and that is something that we've been working for many many years. We will continue I think as the success of our of our business long term is based on evolving the portfolio at the speed that the consumer wants to go. So we'll continue to invest on our permissible portfolio. This is this is growing very fast and we continue to.

To put more investments behind <unk> and Tostitos as the football season, there's a lot of.

Speaker Change: Put more.

Speaker Change: More more legs to that to that business now we have some ships simply Bob gardeners.

Gatherings in those brands belong very well in those gathering so on it will be a combination of value in the form of bonus bags and more product to obviously these are large normally large group gathering so <unk> make a lot of sense, we're giving 20% more product and tostitos on Russell.

Speaker Change: Good more.

Speaker Change: More more legs to that to that business now we have some ships simply Bob corners, we have smartphone we have multiple brands.

Speaker Change: Smartphone we have multiple brands.

Speaker Change: You guys saw the announcement of CSA, hopefully that will go through legal.

Speaker Change: We got approval and we will have another leg to that to that portfolio of solutions to keep growing the permissible portfolio. The same with multicultural we see that with the Hispanic population grow in the United States, we have brands like <unk> and <unk>.

Speaker Change: You guys saw the announcement of CSA, hopefully that will go through legal.

Some of the brands that belong in those locations. We're also.

Speaker Change: While approval and we will have another leg to that to that portfolio of solutions to keep growing the permissible portfolio. The same with multi cultural we see that with the Hispanic population growing in the United States, we have brands like <unk> and <unk>.

Investing in brand event so.

You will see Tostitos under Redoes.

A big brand events around NFL will see lays.

Speaker Change: Gamesa that can work very well to that to that group of consumers. We have those brands in Mexico, we're making them.

Playing some of the classic do us a flavor event. So the brands will have a combination of value and.

Speaker Change: Gamesa that can work very well to that to that group of consumers. We have those brands in Mexico, we're making them.

And big brand events at the same time, we're working on the long term.

Kayla: Kayla them up in the in the U S.

Kayla: And the other lever we're playing.

Speaker Change: There is we're entering new channels, we're trying to expand beyond retail and away from home in other channels, where we can create locations for our brands that right now are underpenetrated, so thats the <unk>.

Evolution of the portfolio and Thats, just something that we've been working for many many years. We will continue I think as the success of our of our business long term is based on evolving the portfolio at the speed that the consumer wants to go. So we will continue to invest on our permissible portfolio. This is this is growing very fast and we continue to.

Speaker Change: Kayla them up India and the U S.

Speaker Change: And the other lever we're playing.

Speaker Change: As we're entering new channels, where we're trying to expand beyond retail and away from home in other channels, where we can create locations for our brands right now are underpenetrated. So that's.

Speaker Change: The multi prone approach.

Speaker Change: Probably going to lean a bit more on value in the first in the first quarters without taking the ball off the long term investments that we're making consistently in building the portfolio for the future. So you will see us.

Speaker Change: They're multi prone approach.

Put more.

We're probably going to lean a bit more on value in the first in the first quarters without taking the ball off the long term investments that we're making consistently in building the portfolio for the future. So you will see us.

More more legs to that to that business now we have some ships simply Bob corners, we have smartphones, we have multiple brands.

Speaker Change: You will see us, making those options, but again I refer back to what I was saying earlier the optionality that we can create for ourselves with our productivity program gives us a lot of flexibility and we will be making those adjustments as we see.

You guys saw the announcement of CSA, hopefully that will go through legal.

We got approval and we will have another leg to that to that portfolio of solutions to keep growing the permissible portfolio. The same with multi cultural we see that with the Hispanic population growing in the United States, we have brands like <unk> and <unk>.

Speaker Change: The returns of the different actions.

Speaker Change: The tactics taking place over the next few months.

Speaker Change: And the returns of the different actions.

Speaker Change: Thank you one moment for our next question.

The tactics taking place over the next few months.

Gamesa that can work very well to that to that group of consumers. We have those brands in Mexico, we're making them.

Philip Buffalo: Our next question comes from Philip Buffalo, New with Citi. Your line is open.

Speaker Change: Thank you one moment for our next question.

Philip Buffalo: Hey, good morning, everyone.

Philip Buffalo: Wanted to ask about the international business.

Philip Buffalo: Our next question comes from Philip Buffalo, New with Citi. Your line is open.

Kayla them up India in the U S and.

Ramon <unk>: So Ramon you mentioned in the prepared remarks, geopolitical pensions and some weaker consumer across certain markets. So maybe you can talk about those markets that had a negative impact.

And the other lever we're playing there.

Philip Buffalo: Hey, good morning, everyone.

We're entering new channels were trying to expand beyond retail in away from home in other channels, where we can create locations for our brands that right now are underpenetrated. So thats the multi prone approach.

Philip Buffalo: I wanted to ask about the international business.

Speaker Change: And quantify any impact in the quarter, and then kind of like looking at the two pieces of the international business. It seems like the deceleration has been more than a convenience foods side versus the beverage business continues to do well. So what are the drivers in international does slowdown in snacks in convenient foods and <unk>.

We're probably going to lean a bit more on value in the first in the first quarters without taking the ball off the long term investments that we're making consistently.

Speaker Change: Looking at the two pieces of the international business. It seems like the deceleration has been more than a convenience foods side versus the beverage business continues to do well. So what are the drivers and international did slowdown in snacks in convenient foods is similar to the U S or are there other drivers. Thank you.

Building the portfolio for the future. So you will see us.

You will see us, making those options, but again I refer back to what I was saying earlier the optionality that we can create for ourselves with our productivity program gives us a lot of flexibility and we will be making those adjustments as we see.

Speaker Change: In regards to the U S or are there other drivers. Thank you.

Speaker Change: Yes. Thank you Phillipe I'll give you a bit of a sense of there are pockets of strength in international.

Philip Buffalo: Thank you Filippo I'll give you a bit of a sense of there are pockets of strength in international.

Speaker Change: Markets like in Southeast Asia, India, those are markets that are growing nicely.

The returns of the different actions and the tactics taking place over the next few months.

Speaker Change: There are markets like in Southeast Asia, India. Those are markets that are growing nicely.

Speaker Change: We see parts of eastern Europe growing nicely, we see Brazil growing at a good pace. So there is pockets of growth. There are other markets, where we're seeing a bit of a deceleration so China is a market where consumers.

Thank you one moment for our next question.

We see parts of eastern Europe growing nicely, we see Brazil growing at a good pace. There is pockets of growth. There are other markets, where we're seeing a bit of a deceleration. So China is a market where can.

Our next question comes from Philip <unk> with Citi. Your line is open.

Speaker Change: Consumers are feeling a bit more constrained and we're seeing that in our in our food business. Although we're gaining share we're seeing that deceleration from double digit to single digit growth, we're seeing a bit of a deceleration in Mexico. Within this has to be related with elections and some of the noise around around the flows of.

Hey, good morning, everyone.

Wanted to ask about the international business.

So Ramon you mentioned in the prepared remarks, geopolitical pensions and some weaker consumer across certain markets. So maybe you can talk about those markets that had a negative impact and quantify any impact in the quarter and then kind of like looking at the two pieces of the international business. It seems like the designer.

Speaker Change: Consumers are feeling more constrained and we're seeing that in our in our food business. Although we're gaining share we're seeing that deceleration from double digit to single digit growth, we're seeing a bit of a deceleration in Mexico. Within this has to be related with elections and some of the noise around around the flows of.

Speaker Change: Social money into the economy, hopefully that will that will now stabilize.

Speaker Change: And we're seeing parts of Western Europe also challenge weather and other other dynamics there now the middle East.

<unk> has been more than a convenience foods side versus the beverage business continues to do well. So what are the drivers in international this slowdown in snacks in convenient foods is similar to the U S or are there other drivers. Thank you.

Speaker Change: Social money into the economy, hopefully that will that will now stabilize.

Speaker Change: And we're seeing parts of Western Europe also challenge weather and other other dynamics there now the middle East is a it's a different reality. The fact that we have a big business in the middle East and yes is being impacted by geopolitical situation and I don't think thats going to change in the account.

Speaker Change: It's a different reality the fact that we have a big business in the middle East and yes is being impacted by geopolitical situation and I don't think thats going to change in the coming months, but.

Thank you Filippo I'll give you a bit of a sense of that.

There are pockets of strength in international.

Speaker Change: Our teams locally are doing a great job navigating the situation and trying to.

Other markets like in Southeast Asia, India, those are markets that are growing nicely.

Speaker Change: In months, but.

Speaker Change: Continue to see.

Our teams locally are doing a great job navigating this situation and trying to.

Speaker Change: Stay relevant for consumers and drive that business forward. So yes, your comment on fluids versus beverages, yes, the beverage business is growing a little bit faster than that.

We see parts of eastern Europe growing nicely, we see Brazil growing at a good pace. There is pockets of growth. There are other markets, where we're seeing a bit of a deceleration so China is a market where consumers.

Speaker Change: Continue to see.

Speaker Change: They are relevant for consumers and drive that business forward.

Yes, your comment on fluids versus beverages, yes, the beverage business is growing a little bit faster than.

Speaker Change: And then the food business globally.

Consumers are feeling a bit more constrained and we're seeing that in our in our food business. Although we're gaining share we're seeing that deceleration from double digit to single digit growth, we're seeing a bit of a deceleration in Mexico. Within this has to be related with elections and some of the noise around around the flows of.

Thank you one moment for our next question.

Speaker Change: Then the fluid business globally.

Speaker Change: Yeah.

Peter Grom: Our next question comes from Peter Grom with UBS. Your line is open.

Speaker Change: Yeah.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Yeah.

Thanks, operator, and good morning, everyone maybe.

Our next question comes from Peter Grom with UBS. Your line is open.

Peter Grom: Thanks, operator, and good morning, everyone.

Social money into the economy, hopefully that will that will now stabilize.

Peter Grom: Maybe just a bit more of a housekeeping question, but with the full year organic revenue guidance still implies a relatively wide range for the fourth quarter. So just any thoughts on where you would expect to fall within that range and then within that any comment on the underlying assumptions embedded clearly things have been more challenged from an external perspective, so just will be.

And we're seeing parts of Western Europe also challenge weather and other other dynamics there now the middle East.

Speaker Change: Then within that any comment on the underlying assumptions embedded clearly things have been more challenged from an external perspective. So just would be curious if you were assuming kind of the current environment holds where would you anticipate category trying to show some improvement here as we exit 2024.

It's a different reality the fact that we have a big business in the middle East and yes is being impacted by geopolitical situation and I don't think thats going to change in the coming months, but.

Speaker Change: Curious if you were assuming kind of the current environment holds or would you anticipate category trying to show some improvement here as we exit 2024.

Jamie Caulfield: Hi, it's Jamie.

I'd say that we really don't expect a huge inflection up or down from.

Our teams locally are doing a great job navigating the situation and trying to.

Jamie Caulfield: Hey, it's Jamie.

Speaker Change: The conditions that existed in Q3.

Jamie Caulfield: I'd say that we really don't expect a huge inflection up or down from.

Continue to see.

They are relevant for consumers and drive that business forward.

Thank you one moment for our next question.

Jamie Caulfield: The conditions that existed in Q3.

Yes, your comment on fluids versus beverages, yes, the beverage business is growing a little bit faster than that.

Our next question comes from Robert Moskow with TD Cowen Your line is open.

Speaker Change: Thank you one moment for our next question.

Robert Moskow: Hi, Thank you.

Speaker Change: Our next question comes from Robert Moskow with TD Cowen Your line is open.

Robert Moskow: Remote and you haven't give a very thoughtful strategic approach to investing in frito lay in some areas you are investing in some.

Then the food business globally.

Yes.

Robert Moskow: Hi, Thank you.

Thank you one moment for our next question.

Robert Moskow: Remote and you haven't you have a very thoughtful strategic approach to investing in frito lay in some areas you are investing in some.

Yeah.

Robert Moskow: And different different ways in different areas.

Our next question comes from Peter Grom with UBS. Your line is open.

Speaker Change: Two question I thought that the plan was to also invest behind casinos and promote more I thought it was like similar to the process for delays did.

Thanks, operator, and good morning, everyone.

Speaker Change: And different different ways in different areas.

Maybe just a bit more of a housekeeping question, but with the full year organic revenue guidance still implies a relatively wide range for the <unk>.

Speaker Change: Two questions I thought that the plan was to also invest behind casinos and promote more I thought it was like similar to the process for delays.

Speaker Change: Did you put that into the market or not because we didn't see.

Fourth quarter. So just any thoughts on where you would expect to fall within that range and then within that any comment on the underlying assumptions embedded clearly things have been more challenged from an external perspective.

Speaker Change: Much yet for <unk>, and then secondly regarding the positive choice brands.

Speaker Change: Did you put that into the market or not because we didn't see.

Speaker Change: Much yet for <unk>, and then secondly regarding the positive choice brands.

Thought that.

Speaker Change: It'd be less exposed to value seeking consumer behavior.

So just would be curious if you were assuming kind of the current environment holds where would you anticipate category trying to show some improvement here as we exit 2024.

Because I think they tend to skew more towards higher income, but but they've been weak can you give us a little bit of.

Speaker Change: I thought that they would be less exposed to value seeking consumer behavior.

Hi, it's Jamie.

Speaker Change: Because I think they tend to skew more towards higher income, but but they've been weak can you give us a little bit of.

Speaker Change: What progress you've made to improve their distribution and where you are in terms of turning them around.

I'd say that we really don't expect a huge inflection up or down from.

The conditions that existed in Q3.

Speaker Change: What progress you've made to improve their distribution and where you are in terms of turning them around.

That's great great questions.

<unk>, we've made some investments in the summer bad debt Tostitos brand has.

Thank you one moment for our next question.

Speaker Change: That's great great questions.

Speaker Change: <unk>, we've made some investments in the summer bed that <unk> brand has.

Speaker Change: A lot of relevance.

Our next question comes from Robert Moskow with PD Cowen Your line is open.

Speaker Change: This fall season, with all the gatherings around TV watching and tailgating and everything else that happens in the U S. So we as we will be putting.

Hi, Thank you.

A lot of relevance.

This fall season, with Aldi gatherings around TV watching and tailgating and everything else that happens in the U S.

Ramon you haven't give a very thoughtful strategic approach to investing in frito lay in some areas you are investing in some.

Speaker Change: Incremental investment behind Tostitos.

Speaker Change: As I mentioned is going to be around.

Speaker Change: As we will be putting.

And different different ways in different areas.

Speaker Change: The brand investment so programs on consumer investment brand investments and also value in the sense of.

Speaker Change: Incremental investment behind Tostitos.

Two question I thought that the plan was to also invest behind to sito's and promote more I thought it was like similar to the process for delays did.

Speaker Change: As I mentioned is going to be around.

The brand investment show programs on consumer investment brand investments and also value in this sense off.

Speaker Change: 20% more bonus bags and some other.

Speaker Change: Additional.

Did you put that into the market or not because we didn't see.

Speaker Change: Value for consumers.

Speaker Change: 20% more bonus bags and some other.

Speaker Change: Well sure will create additional.

Much yet for <unk> and then secondly regarding the positive choice brands I would've thought that they were.

Speaker Change: Additional.

Speaker Change: Penetration for the brand and hopefully growth.

Speaker Change: Value for consumers.

Speaker Change: And we're doing the same with Dorado as Doritos, where we're investing.

Speaker Change: Well sure will create additional.

Speaker Change: Iteration for the brand and hopefully growth.

It'd be less exposed to value seeking consumer behavior.

Speaker Change: A bit more sequentially, which started with layers now we're moving to Dorado Dorado as being a brand that responds very well to any sort of activity and we're seeing it already in the month of in the month of September October how the brand is responding.

Speaker Change: And we're doing the same with Doritos Doritos.

Because I think they tend to skew more towards higher income, but but they've been weak can you give us a little bit of.

Speaker Change: <unk>.

Speaker Change: Bit more sequentially, which started with lay's now we're moving to Dorado Dorado as being a brand that responds very well to any sort of activity and we're seeing it already in the month of in the month of September October how the brand is responding.

What progress you've made to improve their distribution and where you are in terms of turning them around.

Speaker Change: And we will sequentially improve the other the other part of the business that.

That's great great questions.

Speaker Change: With the pandemic mobility and returning to.

<unk>, we've made some investments in the summer bed that <unk> brand.

Speaker Change: And we will sequentially improve the other the other part of the business at.

Two.

Speaker Change: Different patterns by consumers that is really impacted is multi packs and variety packs was a huge driver of business. We're seeing that part of their business kind of slowing down a little bit parties affordability. So.

Speaker Change: With the pandemic mobility and returning to two.

A lot of relevance.

In the fall season, with Aldi gatherings around TV watching and tailgating and everything else that happens in the U S. So we as we will be putting incremental.

Speaker Change: <unk>.

Speaker Change: Different patterns by consumers that has really impacted us multi packs and variety packs was a huge driver of business. We're seeing that part of the business kind of slowing down a little bit bodies affordability. So some some some of the larger banks have been impacted now we offered 10 count.

Speaker Change: Some of the larger banks have been impacted now we offer 10 count multi bags to.

Investment behind Tostitos.

And as I mentioned is going to be around.

Brand investment show programs on consumer investment brand investments and also value in the sense off.

Speaker Change: Before it was more 18% and 24 are now 10 count that is growing very fast parts of the month, the consumers gravitate into or lower purchase that is growing very well. We're also giving bonus bags to a multi packs plus two UNH plus three units. So these will be all additional value that I think will have a positive impact.

Speaker Change: Multi bags too.

Before it was more 18% and 24 are now 10 count that is growing very fast parts of the month. The consumers are gravitating toward lower purchase that is growing very well. We're also give you a bonus bags to a multi packs plus two UNH plus three units. So these will be all additional value that I think will have a positive impact.

20% more bonus bags and some other.

Additional.

Value for consumers.

<unk> will share will create additional penetration.

Penetration for the brand and hopefully growth.

Speaker Change: In the in the business in the in the coming months now when it comes to permissible we have been working on permissible now for many many years, both on making our core products more permissible.

And we're doing the same with Doritos Doritos, where we're investing.

A bit more sequentially, which started with layers now we're moving to Dorado Dorado as being a brand that responds very well to any sort of activity and we're seeing it already in the month of in the month of September October how the brand is responding.

Speaker Change: You see that our levels of Saudi AUM, our levels of <unk> are being reduced and that is creating a positive halo for all our brands, but also creating a portfolio of brands.

Speaker Change: You see that our levels of Saudi AUM, our levels of <unk> are being reduced and thats, creating a positive halo for all our brands, but also create a portfolio of brands.

And we will sequentially improve the other the other part of the business at.

Speaker Change: That are as you say not necessarily premium I think the penetration is still limited around.

With the pandemic mobility and returning to.

Two.

Speaker Change: That are as you say not necessarily premium I think the penetration is still limited around.

Speaker Change: Between 10, and 20% in some of those platforms about already beyond what is the premium consumer it's really democratized same positive choices to consumers.

Different patterns by consumers that is really impacted is multi packs and variety packs was a huge driver of business. We're seeing that part of the business kind of slowing down a little bit parties affordability. So some some some of the larger banks have been impacted now we offered 10 count.

Speaker Change: Between 10, and 20% in some of those platforms about already beyond what is that premium consumer it's really democratized same positive choices to consumers.

Speaker Change: Sun chips is simply range, which covers most of our large brands. It is it is it smartphones. It is bulk gardeners and as I said, some new addition to the family hopefully we see it there. So we keep investing in those we're seeing penetration increasing were seeing.

Speaker Change: Sun chips.

Speaker Change: The simply range, which.

<unk> multi bags too.

Speaker Change: It covers most of our large brands it is.

Before it was more 18% and 24 are now 10 count that is growing very fast parts of the month, the consumers gravitate into or lower purchase that is growing very well. We're also giving bonus bags to a multi packs plus two UNH plus three units. So these will be all additional value that I think will have a positive impact.

Speaker Change: Is it smartphones it is bulk gardeners and as I said, some new addition to the family hopefully we'd see it there. So we keep investing in those we're seeing penetration increasing were seeing positive development of those brands and everything is impacted by affordability even for medium.

Speaker Change: The positive development of those brands and everything is impacted by affordability even for medium income consumers are medium high income consumers. So.

Don't see this as a long term derailleur, we see something that will continue to provide the right portfolio add distribution make sure visibility is at the levels that it needs to be to generate trial be very intentional with where we invest the money behind these brands to generate additional trial.

In the in the business in the in the coming months now when it comes to permissible we have been working on permissible now for many many years, both on making our core products more permissible.

Consumers are medium high income consumers. So we don't see this as a long term derailleur, we see something that will continue to provide the right portfolio add distribution make sure visibility is at the levels that it needs to be to generate trial be very intentional with where we invest the money behind these brands.

Youll see that our levels of Saudi AUM, our levels of <unk> are being reduced and that is creating a positive halo for all our brands, but also creating a portfolio of brands.

Speaker Change: The fact of the matter is that.

Speaker Change: Today with digital advertising on all the information and insights that we have we can be much more precise and thoughtful and.

Speaker Change: To generate additional trial.

That are as you say not necessarily premium I think the penetration is still limited around.

Speaker Change: The fact of the matter is that today with digital advertising on all the information and insights that we have we can be much more precise and thoughtful and.

Speaker Change: And have much higher returns on how we build these platforms, which as I said earlier, there are meaningful they already $2 billion.

Between 10, and 20% in some of those platforms about already beyond what is that premium consumer it's really democratized same positive choices to consumers.

Speaker Change: And have much higher returns on how we build these platforms, which as I said earlier, there are meaningful they already $2 billion.

Speaker Change: And these are this is a large a large business that is growing and will continue to grow for us in the long term.

Sun chips.

Speaker Change: And these are this is a large a large business that is growing and will continue to grow for us in the long term.

Simply range, which.

Speaker Change: Thank you one moment for our next question.

It covers most of our large brands. It is it is smart food. It is bulk gardeners and as I said, some new addition to the family hopefully we would see it there. So we keep investing in those we're seeing penetration increasing were seeing positive development of those brands and everything.

Steve Powers: Our next question comes from Steve Powers with Deutsche Bank. Your line is open.

Speaker Change: Thank you one moment for our next question.

Steve Powers: Hey, good morning, everybody. Thank you.

Steve Powers: Our next question comes from Steve Powers with Deutsche Bank. Your line is open.

Steve Powers: So just maybe clarify ramone, if you could talk a little bit more about.

Steve Powers: Hey, good morning, everybody. Thank you.

Steve Powers: What drove the step down between 4%.

Steve Powers: So just maybe clarify ramone, if you could talk a little bit more about.

Impacted by affordability, even for medium income consumers are medium high income consumers. So we don't see this as a long term derailleur, we see something that will continue to provide the right portfolio add distribution make sure visibility is at the levels that it needs to be to generate trial be.

Speaker Change: Organic sales growth for the year and now low single digits the balance between how much was driven by.

Steve Powers: What drove the step down between 4%.

Speaker Change: Some of the changes in international markets that you've talked about versus less improvement than expected and some of the domestic businesses.

Speaker Change: Organic sales growth for the year and now low single digits the balance between how much was driven by.

Speaker Change: Some of the changes in international markets that you've talked about versus less improvement than expected and some of the domestic businesses.

Speaker Change: I'm not 100% clear.

The incremental <unk>.

Our intentional with where we invest money behind these brands to generate additional trial.

Speaker Change #100: And then within that within Frito lay specifically you talked a lot about investments both incremental brand building and sort of.

Speaker Change: I'm not 100% clear.

Speaker Change: The incremental <unk>.

Fact of the matter is that today with digital advertising on all the information and insights that we have we can be much more.

And then within that within Frito lay specifically you talked a lot about investments both incremental brand building and sort of.

Speaker Change #101: Sharpening price points in the value equation, I guess I'm gleaning from that that we should potentially expect segment pricing to the flip negative as we go forward.

Precise and thoughtful and.

Speaker Change: Sharpening price points in the value equation I guess.

And have much higher returns on how we build these platforms, which as I said earlier, there are meaningful they already $2 billion.

Speaker Change: I'm gleaning from that that we should potentially expect segment pricing to the flip negative as we go forward.

Speaker Change #101: As you realize those investments so I just wanted to play that back and see if that was an appropriate assumption.

And these are this is a large a large business that is growing and will continue to grow for us in the long term.

Jamie Caulfield: Hey, Steve it's Jamie.

Speaker Change: As you realize those investments so I just wanted to play that back and see if that was an appropriate assumption.

Steve Powers: On the revision from the.

Jamie Caulfield: Four to low single digits combination of recovery of the consumer in the U S. Frankly has been slower than we had anticipated and then to a lesser degree the geopolitics of impacted.

Jamie Caulfield: Hey, Steve it's Jamie.

Thank you one moment for our next question.

On the revision from the four to low single digits combination of recovery of the consumer in the U S. Frankly, it's been slower than we had anticipated and then to a lesser degree the geopolitics of <unk>.

Our next question comes from Steve Powers with Deutsche Bank. Your line is open.

Hey, good morning, everybody. Thank you.

So just maybe clarify remote if you could talk a little bit more about.

Speaker Change #102: For National it's probably a half point drag on.

Total Pepsico revenue growth in the quarter.

Speaker Change: <unk> International that's probably a half point drag on.

What drove the step down between 4%.

Speaker Change #103: As far as pricing goes it's a bit complex.

Speaker Change: Total Pepsico revenue growth in the quarter.

Organic sales growth for the year and now low single digits the balance between how much was driven by.

Speaker Change #104: We're investing in affordability, where it makes sense, but we're investing in a number of levers to stimulate demand and I think too soon to too soon to call on what the pricing outlook is going forward.

Speaker Change: As far as pricing goes it's a bit complex.

Some of the changes in international markets that you talked about versus less improvement than expected and some of the domestic businesses.

Speaker Change: We're investing in affordability, where it makes sense, but we're investing in a number of levers to stimulate demand and I think too soon to too soon to call on what the pricing outlook is going forward.

I'm not 100% clear.

The incremental <unk>.

Speaker Change #105: Thank you one moment for our next question.

And then within that within Frito lay specifically you've talked a lot about investments both incremental brand building and sort of.

Andrew <unk>: Our next question comes from Andrew <unk> with Jpmorgan. Your line is open.

Speaker Change #100: Thank you one moment for our next question.

Sharpening price points in the value equation I guess.

Speaker Change #100: Yeah.

Andrew <unk>: Thank you good morning.

Andrew <unk>: Our next question comes from Andrew <unk> with Jpmorgan. Your line is open.

Andrew <unk>: Could you just step back and think about international coking coal.

I'm gleaning from that that we should potentially expect.

Pricing too.

Speaker Change #107: We also need to see an increased level of investment in marketing and flat volumes in key regions like Latam.

Thank you good morning.

Negative as we go forward.

Speaker Change #102: Could you just step back and think about international coking, it's who we.

You realize those investments so I just wanted to play that back and see if that was an appropriate assumption.

Speaker Change #102: Also need to see an increased level of investment.

Speaker Change #107: We're also keeping momentum in Europe that was that has been.

Hey, Steve it's Jamie.

Speaker Change #103: Marketing flat volumes in key regions like Latam.

On the revision from the fall.

Speaker Change #108: Nice place, where I know all of them all and you'll have a lot of experience in there and negotiating with with retailers and so do we see I mean I have my question Eastern we will tend on the affordability that we saw also in the U S is that something that we should be bracing for in places like Latam, It's typically in Mexico.

Speaker Change #103: Also keeping momentum in Europe that was that has been.

Low single digits.

Combination of recovery of the consumer in the U S. Frankly has been slower than we had anticipated and then to a lesser degree the geopolitics.

Speaker Change #104: A very nice place, where I know all of them on Youll have a lot of experience in there and negotiating with with retailers.

Speaker Change #105: And so do we see I mean I have my question Eastern we will tend on the affordability that we saw also in the U S.

Impacted international that's probably a half point drag on.

Total Pepsico revenue growth in the quarter.

Speaker Change #109: I understand the tough comps, but.

Speaker Change #106: That's something that we should be facing for in places like Latam, It's typically in Mexico, I understand the tough comps but.

Speaker Change #108: Going forward.

As far as pricing goes it's a bit complex.

Speaker Change #108: Looking at ways to kind of dialing in.

We're investing and affordability, where it makes sense, but we're investing in a number of levers to stimulate demand and.

Speaker Change #110: Rgs <unk> Latam and on the Frito lay North America.

Speaker Change #106: Going forward looking at ways to kind of dialing in.

Peter Grom: Hi, Peter.

Speaker Change #107: Rgs <unk> Latam and on the Frito lay North America.

I would say Ken.

Too soon to too soon to call on what the pricing outlook is going forward.

Speaker Change #111: And a follow up in the investments you made sense should we prepare for margins to remain pressured team we lapped.

Peter.

Ken: I would say Ken.

And a follow up in the investments you mentioned should we prepare for margins to remain pressured and team. Thanks, So we lap.

Thank you one moment for our next question.

Speaker Change #112: Our next here and.

Speaker Change #113: And therefore, I think we saw a sizable 100 basis points declining operating margin loss of delay I appreciate that thank you.

Yeah.

Our next.

Comes from Andrew <unk> with Jpmorgan. Your line is open.

Speaker Change #109: Our next here.

Speaker Change #110: And therefore, I think we saw our highest votes for 100 basis point decline in operating margin philosophy delay I appreciate that thank you.

Thank you good morning, I wanted to just step back and think about international coking as food.

Andrea: Thank you Andrea.

Speaker Change #115: I've seen your question on international.

Speaker Change #116: It's very valid I think we've always been very good at.

Also need to see an increased level of investment.

Thank you Andrea.

Speaker Change #111: I've seen your question on international.

Marketing flat volumes in key regions.

Speaker Change #117: The affordability and the revenue management in Latam for our food business and we.

Speaker Change #112: It's very valid I think we've always been very good at.

Tim.

Also keeping momentum in Europe that was that has been.

Speaker Change #113: The affordability and the revenue management in Latam for our food business and we.

Speaker Change #118: I think we manage well the leather price rather than the entry points on the price bags in how we execute that and the point of sale in our in our racks in an hour.

A very nice place, where I know all of them all and you'll have a lot of experience in there and negotiating with with retailers and so do we see I mean I have my question Eastern will tend on the upfront ability that we saw also in the U S.

Speaker Change #114: I think we manage well the leather price leather and the entry points on the prize bags in how we execute that and the point of sale in our in our in our racks in an hour.

Speaker Change #118: Front facing to the consumer so we will continue to dial that up.

That's something that we should be bracing for in places like Latam, It's typically Mexico I understand the tough comps but.

Speaker Change #119: The truth is that in Latam as well, we have great brands and we continue to invest in those brands make sure that we carry the.

Speaker Change #114: Front facing to the consumer so we will continue to dial that up.

Going forward looking at ways to kind of dialing in.

Speaker Change #114: The truth is that in Latam as well, we have great brands and we continue to invest in those brands and make sure that we carry.

Speaker Change #119: Now to the consumer and to our brands versus strong competitors that we have in the area. So youll see a balance between both of that is not a new capability is something that we've been executing for a long time, we're perfecting that as we use leverage.

Rgs <unk> Latam and on the Frito lay North America.

Speaker Change #114: Now to the consumer into our brands versus strong competitors that we have in the areas. So you'll see a balance between both body is not a new capability is something that we've been executing for a long time, we're perfecting that as we use leverage.

Peter.

I would say Ken.

And a follow up in the investments you mentioned should we prepare for margins to remain pressured and team. Thanks, you will lap.

Speaker Change #120: The data and the information that we have and we have more precise execution of tools versus more broad broad based execution that we might have had in the past. So I think as a capability that we can keep optimizing body will be critical.

Our next here.

Speaker Change #114: Data and the information that we have and we have more precise execution of tools versus more broad broad based execution that we might have had in the past. So I think as a capability that we could keep optimizing body will be critical.

And therefore, I think we saw our highest votes for 100 basis points declining operating margin philosophy delay I appreciate that thank you.

Thank you Andrea.

Jamie Caulfield: As driving the business performance in the coming years now when it comes to the to the margin maybe Jamie you want to.

I've seen your question on international.

It's very valid I think we've always been very good at.

Jamie Caulfield: As driving the business performance in the coming years now when it comes to the to the margin maybe Jamie you want to.

Jamie Caulfield: Robert one overall, the frito, but we put we put frito margin in the context of overall Pepsico. So maybe Jamie you want to talk about how we are approaching margin yes.

The affordability and their revenue management in in Latam for our food business and we.

Speaker Change #114: Robert.

Jamie Caulfield: The frito, but we put we put frito margin in the context of overall Pepsico. So maybe Jamie you want to talk about how we approach and margin, yes, Andre we're managing the margin at a total portfolio level at this point in.

I think we manage well the leather price leather and the entry point on the prize bags in how we execute that and the point of sale in our in our in our rocks in an hour.

Andre: Andre we're managing the margin at a total portfolio level at this point in.

Speaker Change #122: With with Frito, our focus right now is on.

Speaker Change #122: Stimulating.

Front facing to the consumer so we will continue to dial that up.

Speaker Change #115: With with Frito are.

Consumer demand doing it in a responsible and disciplined way.

Speaker Change #116: Focus right now is on.

The truth is that in Latam as well, we have great brands and we continue to invest in those brands and make sure that we carry.

Speaker Change #116: Stimulating.

Jamie Caulfield: But overall, we're focused on the total Pepsico margin over time, I think when the consumer gets a little more healthy and.

Jamie Caulfield: Consumer demand doing it in a responsible and disciplined way.

Now to the consumer into our brands versus strong competitors that we have in the area. So you will see a balance between both body is not a new capability is something that we've been executing for a long time, we're perfecting that as we use leverage.

Speaker Change #117: But overall, we're focused on the total Pepsico margin over time, I think when the consumer gets a little more healthy and.

Jamie Caulfield: The business the business accelerates, we can put a little more emphasis on managing the margin, but for right now we're really focused on the consumer and stimulating demand.

Speaker Change #117: The business the business accelerates, we can put a little more emphasis on managing the margin, but for right now we're really focused on the consumer and stimulating demand.

Speaker Change #123: Yes. This year is a good example of how we're able to invest in Frito was expanding pepsico margin meaningfully in substantially and I think thats. The way you should think about the way we will run the business in the near future.

Data and information that we have and will have more precise execution of tools versus more broad broad based execution that we might have had in the past. So I think as a capability that we could keep optimizing body will be critical.

Speaker Change #118: Yes. This year is a good example of how we're able to invest in Frito was expanding pepsico margin meaningfully in substantially and I think thats. The way you should think about the way we will run the business in the near future.

As driving the business performance in the coming years now when it comes to the to.

Speaker Change #123: One moment for our next question.

To the margin, maybe Jamie you want to.

Robert.

Our next question comes from Chris Carey with Wells Fargo. Your line is open.

The frito, but we put we put frito margin in the context of overall Pepsico. So maybe Jamie you want to talk about how we approach and margin yes Andre.

Speaker Change #118: One moment for our next question.

Chris Carey: Hi, Good morning, Thank you for the question.

Chris Carey: Our next question comes from Chris Carey with Wells Fargo. Your line is open.

Chris Carey: I just wanted to ask a higher level question, then a follow up on the line of questioning that.

Managing the margin at a total portfolio level at this point in.

Chris Carey: Okay.

Chris Carey: Hi, Good morning, Thank you for the question.

Andre Islands: I'll, let Andre Islands.

Just wanted to ask a higher level question, then a follow up on the line of questioning.

Ramon <unk>: It was approaching but the higher level question Ramon.

With with Frito, our focus right now is on.

Andre Islands: As you begin to make pricing investments into this portfolio and other strategic investments that you had outlined for Frito lay.

That Andrea wounds.

Stimulating.

Speaker Change #120: Was approaching.

Consumer demand doing it in a responsible and disciplined way.

Ramon <unk>: The higher level question Ramon.

Speaker Change #121: As you begin to make pricing investments into this portfolio and other strategic investments that <unk> outlined for Frito lay.

But overall, we're focused on the total Pepsico margin over time, I think when the consumer gets a little more healthy and.

Speaker Change #126: Beginning to see that sort of traction that you're getting or not and I just wonder if.

Speaker Change #127: Your assessment of the slowdown that we're seeing is entirely cyclical said another way. This is purely about value equation or are you seeing any consumption habits, which may feel more structural or structural or secular that are moving away from the business I wonder if.

Beginning to see the sort of traction that you're getting or not and I just wonder if.

The business the business accelerates, we can put a little more emphasis on managing the margin, but for right now we're really focused on the consumer and stimulating demand.

Speaker Change #122: Your assessment of the.

Speaker Change #123: The slowdown that we're seeing is entirely cyclical said another way. This is purely about value equation or are you seeing any consumption habits, which may feel more structural or structural or secular that are moving away from the business I wonder if the CST acquisition.

Yes. This year is a good example of how.

We're able to invest in Frito was expanding pepsico margin meaningfully in substantially and I think thats. The way you should think about the way we will run the business in the near future.

Speaker Change #127: The CST acquisition.

Speaker Change #128: Not how you see the direction of travel in this business over time, and if I could just one follow up on the line of questioning about total company margins.

A nod to how you see the direction of travel in this business over time, and if I could just one follow up on the line of questioning about total company margins.

One moment for our next question.

Speaker Change #129: Just from a productivity standpoint are there are there any divisions, where you feel better about your productivity initiatives.

Our next question comes from Chris Carey with Wells Fargo. Your line is open.

Speaker Change #124: Just from a productivity standpoint are there are there any divisions, where you feel better about your productivity initiatives.

Speaker Change #130: Profit was under pressure this quarter, despite youre going to be expanding programs. So.

Hi, Good morning, Thank you for the question.

I just wanted to ask a higher level question, then a follow up on the line of questioning.

Speaker Change #125: Profit was under pressure this quarter, despite youre going to be expanding program. So.

Speaker Change #131: The international PVA productivity programs.

Speaker Change #132: The visibility there just quite good.

Andrea wounds.

The international PVA productivity programs.

It was approaching.

Speaker Change #132: And so anyway.

The higher level question Ramon.

Speaker Change #132: Pension on.

As you begin to make pricing investments into this portfolio and other strategic investments that you would outline for frito lay.

Speaker Change #126: The visibility there just quite good.

Speaker Change #133: Your visibility on cost offsets for the investments that are coming and fritos. Thanks for entertaining both of those.

Speaker Change #126: And so anyway.

Speaker Change #127: Pension on.

Speaker Change #128: Your visibility on cost offsets for the investments that are coming and fritos. So thanks for entertaining both of those.

Speaker Change #132: Yes.

Speaker Change #134: Great questions. Both let me start with the margins and I will get back to the to the long term growth of the.

Beginning to see the sort of traction that you're getting or not and I just wonder if.

Speaker Change #127: Yes.

Speaker Change #129: Great questions. Both let me start with the margins and I will get back to the to the long term growth of the.

Your assessment.

The food business on the margins, we've declared very clearly that one of the strategic goals that we have is to keep improving the margins of our beverage business in the U S. I think we're on track.

The slowdown that we're seeing is entirely cyclical said another way. This is purely about value equation or are you seeing any consumption habits, which may feel more structural or structural or secular that are moving away from the business I wonder if the CST acquisition.

Speaker Change #130: The food business on the margins, we've declared very clearly that one of the strategic goals that we have is to keep improving the margins of our beverage business in the U S. I think we are on track.

Great performance by the team and in improving the efficiency of the business managing the portfolio towards high margin segments and.

Speaker Change #130: Great performance by Rob on the team.

A nod to how you see the direction of travel in this business over time, and if I could just one follow up on the line of questioning about total company margins.

In improving the efficiency of the business managing their portfolio towards high margin segments and.

Speaker Change #135: The business grew margin last year meaningfully and it will grow margin this year meaningfully and we see a good a good line of sight to our intentions of the mid teens margins in a couple of years in <unk>. So that was working the same internationally.

Speaker Change #131: The business grew margin last year meaningfully and it will grow margin this year meaningfully and we see a good a good line of sight to our intentions of the mid teens margins in a couple of years in <unk>. So that is working the same internationally.

Just from a productivity standpoint are there are there any divisions, where you feel better about your productivity initiatives nearly frito profit was under pressure this quarter, despite youre going to be expanding program. So.

Speaker Change #134: <unk> seen the.

The margin improvement in international.

Speaker Change #134: That's driven by scale, but also by efficiency and productivity efforts.

The international PVA productivity programs.

Speaker Change #131: <unk> seen the.

Speaker Change #131: The margin improvement in international.

Speaker Change #136: First by all our teams across our key markets and that will continue. So those two are meaningful margin expansion opportunities for Pepsico that we will continue to put our focus and deliver as we have a more balanced approach to the to the margins of the company and we should be able to.

Speaker Change #131: That's driven by scale, but also by efficiency and productivity efforts.

The visibility there just quite good.

And so anyway.

Speaker Change #132: First by all our teams across our key markets and that will continue. So those two are meaningful margin expansion opportunities for Pepsico that we will continue to put our focus and deliver as we have a more balanced approach to the to the margins of the company and we should be able to.

Pension on.

Your visibility on cost offset sort of the investments that are coming and fritos. So thanks for entertaining both of those.

Yes.

Great questions. Both let me start with the margins and then I'll get back to the to the long term growth of the.

Speaker Change #136: Expand our margins, we're investing in the future of the company and providing value to consumers. So those three levers.

Expand our margins, we're investing in the future of the company and providing value to consumers. So those three levers.

Speaker Change #137: We feel good about that I didn't think about <unk> in international is two contributors to how Pepsico continues to expand its margins in a responsible way in the coming years now when it comes to the food business. Your question on <unk>.

Speaker Change #133: We feel good about that I didn't think about <unk> and international as the two contributors to how Pepsico continues.

Great performance by the team.

In improving the efficiency of the business managing their portfolio towards high margin segment and.

Speaker Change #133: <unk> continues to expand its margins in a responsible way in the coming years.

Speaker Change #137: On the strategic.

The business grew margin last year meaningfully and it will grow margin this year meaningfully and we see a good a good line of sight to our intentions of the mid teens margins in a couple of years in <unk>. So that is working the same internationally.

Speaker Change #134: Now when it comes to the food business your question on.

Speaker Change #138: The transformation of the portfolio, we have been working for many many years on evolving our portfolio with the trends of the market and these trends are different in different parts of the world, but clearly the consumer.

Speaker Change #134: On an as strategic.

The transformation of the portfolio, we have been working for many many years on evolving our portfolio with the trends of the market and these trends are different in different parts of the world, but clear the consumer.

Speaker Change #138: It has been moving in some parts of the world towards.

<unk> seen the.

The margin improvement in international.

Speaker Change #138: Looking for more permissible.

That's driven by scale, but also by efficiency and productivity efforts.

Speaker Change #139: Snacks are going into more and structure meals. Those two are big big levers of growth for US long term. One is yes, we are providing consumers with better options to fulfill their needs for either a treat.

Speaker Change #134: Has been moving in some parts of the world towards.

Speaker Change #135: Looking for more permissible.

First by all our teams across our key markets and that will continue. So those two are meaningful margin expansion opportunities for Pepsico that we will continue to put our focus and deliver as we have a more balanced approach to the to the margins of the company and we should be able to.

Speaker Change #136: <unk> are going into more and structure meals. Those two are big big levers of growth for US long term. One is we yes, we are providing consumers with better options to fulfill their needs for either a treat.

Speaker Change #140: Or any other location, a social gathering or whatever the location is on this <unk> and we feel good about the way our R&D has improve the way our portfolio offerings have improved in providing permissibility in the category and we see that India penetration of the category, we see it in the frequency.

Yes.

Speaker Change #137: Or any other location, a social gathering or whatever the location is on this <unk> and we feel good about the way our R&D has improved the way our portfolio offerings have improved in providing permissibility in the category and we see that in the penetration of the category, we see it in the frequency.

Expand our margins, we're investing in the future of the company and providing value to consumers. So those three levers.

We feel good about that I didn't think about <unk> and international as the two contributors to how Pepsico.

I don't think thats going to be changing.

Speaker Change #140: The long term the big opportunity, we see and that is.

<unk> continues to expand its margins in a responsible way in the coming years now when it comes to the foot basin as your question on.

Speaker Change #138: One thing that's going to be changing.

Speaker Change #140: That is very visible in developed markets, but also in some of the developing markets as consumers are changing their eating habits and they are there.

Speaker Change #139: The long term the big opportunity, we see and that is.

Speaker Change #140: That is very visible in developed markets, but also in some of the developing markets is consumers are changing their eating habits and they are there.

On on strategic.

Speaker Change #140: Eating more calories in the small and small portions throughout the day.

The transformation of the portfolio, we have been working for many many years on evolving our portfolio with the trends of the markets and these trends are different in different parts of the world, but clear the consumer.

Speaker Change #141: So the concept of mini meals, the concept of replacing a big meal with a smaller meal, but you can think about a sovereign homeowners with ddos.

Our eating more calories in the small and small portions throughout the day.

Speaker Change #141: So the concept of mini meals, the concept of replacing a big meal with a smaller meal, but you can think about a sovereign who moves with <unk>.

Has been moving in some parts of the world towards.

Speaker Change #142: And then in banana or something like this kind of meals are becoming more and more popular and especially if you think about gen Z. There you're seeing these mini meals much more than we used to have we used to use it in our in our in our equivalent in H well.

Looking for more permissible.

<unk> are going into more and structure meals. Those two are big big levers of growth for us long term, one as well, yes, we're providing consumers with better options to fulfill their needs for either a treat or a.

Speaker Change #142: And then a banana or something like this kind of meals are.

Speaker Change #143: Becoming more and more popular and especially if you think about Gen Z. There youre seeing these mini meals much more than we used to have we used to use it.

Speaker Change #143: The positive trends for the category, we're leaning in with innovation, there, we're going to be moving our brands more into those spaces. Because there there are a lot of occasions that our brands belong in and that will be able to satisfy satisfy consumers in that space. So, yes, health and wellness and we're ready and we've been more.

Or any other location, a social gathering or whatever the location is on this <unk> and we feel good about the way our R&D has improved the way our portfolio offerings have improved.

Speaker Change #144: In our in our accretive on an H, we see the positive trends for the category. We're leaning in with innovation there, we're going to be moving our brands more into those spaces. Because there. There are a lot of locations that are brands belong in and that will be able to satisfy satisfy consumers in that space. So yes Hello.

In providing permissibility in the category and we see that India penetration of the category, we see it in the frequency.

Speaker Change #144: Moving their portfolio in that direction, yes, and structure meals, many meals and we're moving the portfolio in that direction Youre assessing many is right. The acquisition of <unk>, hopefully will give us another tool to capture both permissible locations and enter into meals in a way that is.

One thing that's going to be changing.

For the long term the big opportunity, we see then that is.

Speaker Change #145: On wellness and we're ready and we've been moving their portfolio in that direction, yes, and structure meals, many meals and we're moving the portfolio in that direction Youre assessing mini is right. The acquisition of CSI, hopefully will give us another tool to capture both permissible locations and enter into meals in a way that is.

That is very visible in developed markets, but also in some of the developing markets is consumers are changing their eating habits on there.

Our eating more calories in the small and small portions throughout the day.

Speaker Change #144: And that is sustainable long term, but there are many other brands in the portfolio that can play that can play in both in both of those spaces.

So the concept of mini meals, the concept of replacing a big meal with a smaller meal, but you can think about a sovereign who moves with <unk>.

Speaker Change #145: That is sustainable long term, but there are many other brands in the portfolio that can play that can play in both in both of those spaces.

Speaker Change #145: Thank you one moment for our next question.

Robert <unk>: Our next question comes from Robert <unk> with Evercore ISI. Your line is open.

And then a banana or something like this kind of meals are.

Robert <unk>: Great. Thank you very much.

Becoming more and more popular and especially if you think about Gen Z there youre seeing D. As many meals much more than we used to have we used to use it.

Robert <unk>: Our next question comes from Robert <unk> with Evercore ISI. Your line is open.

Robert <unk>: First off I was wondering if you can give us.

Robert <unk>: A report card on the Gatorade transition.

Robert <unk>: Great. Thank you very much.

First off I was wondering if you can give us a report card on the Gatorade transition.

Robert <unk>: And then related to that.

In our in our equivalent in Asia, we see the positive trends for the category. We're leaning in with innovation there, we're going to be moving our brands more into those spaces. Because there there are a lot of locations that our brands belong in and that will be able to satisfy satisfy consumers in that space. So yes Hello.

Robert <unk>: Perhaps if you could discuss.

Robert <unk>: The DSD system.

Robert <unk>: And then related to that.

Robert <unk>: In general.

Robert <unk>: Perhaps if you could discuss.

Philip Buffalo: P BNA and weather through all the great work that you guys have been doing for the last couple of years have you been able to reengineer the system. So that perhaps it's less volume dependent than it was in the past and that is part of your path to the mid teen margins in a few years. Thank you.

Robert <unk>: The DSD system in general in <unk>.

<unk>.

Robert <unk>: And weather.

Speaker Change #147: Through all the great work that you guys have been doing for the last couple of years have you been able to reengineer. The system. So that perhaps is less volume dependent than it was in the past and that is part of your path to the mid teen margins in a few years. Thank you.

And wellness and we're ready and we've been moving their portfolio in that direction, yes, and restructure meals, meaning meals and we're moving the portfolio in that direction Youre assessing mini is right. The acquisition of CSI, hopefully will give us another tool to capture both permissible locations and enter into meals in a way that is.

Speaker Change #147: Great questions.

Speaker Change #148: On Gatorade, we feel good about Gatorade clearly weak we learned last year and we've executed better this year.

Speaker Change #148: Great question.

Speaker Change #149: On Gatorade, we feel good about getting rate clearly weak we learned last year and we've executed better this year.

Speaker Change #148: I'm sure that if you.

And then a sustainable long term, but there are many other brands in the portfolio that can play that complaint both in both of those spaces.

Speaker Change #148: If you ask our customers they would still.

I think that we have ways to improve and I would agree so our service levels have improved meaningfully, but still opportunities, we'll get better as we go there.

Speaker Change #149: I'm sure that if you if you.

Speaker Change #150: You ask our customers they would still.

Thank you one moment for our next question.

Speaker Change #151: Seeing that we have ways to improve and I would agree so our service levels have improved meaningfully, but still opportunities, we'll get better as we go there.

Speaker Change #148: The output of that improvement and we've seen shares of.

Our next question comes from Robert <unk> with Evercore ISI. Your line is open.

Speaker Change #149: Share of market of Gatorade in the sport category going up and within these are sustainable.

Great. Thank you very much.

Speaker Change #151: The output of that improvement and we've seen shares of.

First off I was wondering if you can give us a report card on the Gatorade transition.

Speaker Change #152: Share of market of Gatorade in the sport category going up and within these are sustainable.

Speaker Change #148: Sustainable.

Speaker Change #148: Share performance, so that on one side along with Gatorade.

And then related to that.

Speaker Change #150: The one brand that is performing beautifully for asics propel and propel as part of also these transformation propel is growing double digit.

Speaker Change #152: Sustainable.

Speaker Change #152: Share performance, so that on one side along with Gatorade.

Perhaps if you could discuss.

The DSD system in general in <unk>.

Speaker Change #153: One brand that is performing beautifully for asics propel and propel as part of also these transformation propel is growing double digits.

Speaker Change #151: Is fulfilling some great spaces for consumers complimentary to Gatorade and is benefiting as well by the execution that we are putting in place. So that we feel good about that is improving somehow the economics of our DSD system in some states, where we had lower scale with our soft drinks and other parts of the portfolio.

And weather.

Through all the great work that you guys have been doing for the last couple of years have you been able to reengineer. The system. So that perhaps is less volume dependent than it was in the past and that is part of your path to the mid teen margins in a few years. Thank you.

Speaker Change #153: Fulfilling some grade spaces for consumers complementary to Gatorade.

Is benefiting as well by the execution that we're putting in place. So that we feel good about that is improving somehow the economics of our DSD system in some states, where we had lower scale with our soft drinks on other parts of the portfolio. So that's a good move overall.

Speaker Change #152: Thats a good move overall.

Great question John.

Speaker Change #153: With regards to the productivity journey on PV and a go to market is clearly an opportunity and we are optimizing.

On Gatorade, we feel good about Gatorade clearly weak we learned last year and we've executed better this year.

Speaker Change #154: With regards to the productivity journey on PV and a go to market is clearly an opportunity and we are optimizing.

I'm sure that if you if.

Speaker Change #154: A lot of variables, both in our warehousing or transportation or delivery models that will be sources of productivity going forward.

If you ask our customers they would still.

Seeing that we have ways to improve and I would agree so our service levels have improved meaningfully, but still opportunities, we'll get better as we go there.

Speaker Change #154: A lot of variables.

Speaker Change #154: In our warehousing or transportation or delivery models that will be sources of productivity going forward.

Speaker Change #155: And but not only right. We're seeing that we can also be more efficient in many other parts and how we procure we can be more efficient in how we invest in demand and we can be more efficient in many areas in the <unk> business and that's why I said earlier, we feel good about the trajectory of the of the busy.

The output of that improvement and we've seen shares of.

Share of market of Gatorade in the sport category going up and within these are sustainable.

Sustainable.

Share performance, so that on one side along with Gatorade.

We feel good about profitable growth, we feel good about how this business can get to a platform.

The one brand that is performing beautifully for ASIC propel and propel as part of also these transformation propel is growing double digit.

Speaker Change #155: Platform of mid teens.

Speaker Change #156: We feel good about profitable growth, we feel good about how this business can get to a.

Speaker Change #156: Operating margin that will be great for Pepsico, and we will be will be great for obviously, our beverage business in North America as well.

Fulfilling some great spaces for consumers complimentary to Gatorade and is benefiting as well by the execution that we're putting in place. So that we feel good about that is improving somehow the economics of our DSD system in some states, where we had lower scale with our soft drinks on other parts of the portfolio.

Speaker Change #156: Platform of mid teens.

Operating margin that will be great for Pepsico, and we will be will be great for obviously, our beverage business in North America as well.

Speaker Change #157: Thank you one moment for our next question.

Speaker Change #157: Yeah.

Kevin Grundy: Our last question comes from Kevin Grundy with BNP Paribas. Your line is open.

Thank you one moment for our next question.

Speaker Change #156: Yeah.

Kevin Grundy: Great. Thanks, Good morning, everyone. Thanks for the question so remote just sticking with North American beverages, maybe we can pivot and get an update on the energy drink category.

Kevin Grundy: Our last question comes from Kevin Grundy with BNP Paribas. Your line is open.

Thats a good move overall.

With regards to the productivity journey on <unk> go to market is clearly an opportunity and we are optimizing.

Kevin Grundy: Great. Thanks, Good morning, everyone. Thanks for the question.

Speaker Change #159: When you broaden the portfolio strategy here in recent years.

Kevin Grundy: And just sticking with North American beverages, maybe we can pivot and get an update on the energy drink category.

A lot of variables, both in our warehousing or transportation or delivery models that will be sources of productivity going forward.

Kevin Grundy: Not lost on you of course like salty snacks in the U S category remains surprisingly weak for a couple of questions. Please one maybe just some updated thoughts on the energy drink category and what the recovery. There may look like and then to perhaps comment on the sharp slowdown that we've seen with bell piece is market share and your ability for that brand to regain its lost momentum in the Pepsi system. Thank you.

Speaker Change #158: When you broaden the portfolio strategy here in recent years.

Speaker Change #159: Lots of new of course like salty snacks in the U S category remains surprisingly weak for a couple of questions. Please one maybe just some updated thoughts on the energy drink category and what the recovery. There may look like and then to perhaps comment on the sharp slowdown that we've seen with bell piece is market share and your ability for that brand to regain its lost momentum in the past you said thank you.

And but not only right.

We're seeing that we can also be more efficient in many other parts and how we procure we can be more efficient in how we invest in demand and we can be more efficient in many areas in the <unk> business and that's why I said earlier, we feel good about the trajectory of the of the business, we feel good about profitable growth.

Kevin Grundy: Thank you Kevin.

Kevin Grundy: Indeed.

Speaker Change #160: The energy need state by consumers.

Kevin Grundy: Thank you Kevin.

Speaker Change #161: In the U S and everyone. There well will continue for the foreseeable future thing everybody needs a bit of an energy boost throughout the day and so that need state will remain and I think it is going to be up too.

Speaker Change #160: Listen I think the.

The energy need state by consumers.

We feel good about how this business can get to a platform of mid teens.

Speaker Change #161: In the U S on everyone. There well will continue for the foreseeable future thing everybody needs a bit of an energy boost throughout the day and so that need state will remain and I think it's.

Operating margin that will be great for Pepsico, and we will be will be great for obviously, our beverage business in North America as well.

Kind of.

Speaker Change #162: Manufacturers are brand owners like us to satisfy those needs whether it's through suffering through.

Speaker Change #162: It's going to be up too.

Thank you one moment for our next question.

Speaker Change #162: Kind of.

Speaker Change #163: Golf is routine through energy drink, so I think that that opportunity remains and that opportunity will continue to be.

Speaker Change #163: Manufacturers are brand owners like us to satisfy those needs whether it's through soft drinks through.

Okay.

Our last question comes from Kevin Grundy with BNP Paribas. Your line is open.

Speaker Change #163: Golf fees routine through energy drink, so I think that that opportunity remains and that opportunity will continue to be.

Speaker Change #163: Fortunately for innovation and from brand investments so there.

Great. Thanks, Good morning, everyone. Thanks for the question so remote just sticking with North American beverages, maybe we can pivot and get an update on the energy drink category.

Speaker Change #163: On the short term.

An opportunity for innovation and from brand investments. So they are on.

Speaker Change #163: And how how.

Speaker Change #164: How different segments of the category play out I think the energy.

We broadened the portfolio strategy here in recent years.

Speaker Change #163: The short term.

Speaker Change #165: The category in the U S is clearly being impacted by the traffic and convenience stores and traffic and convenience stores has gone down has been going down. It's I think it's part of the economic cycle that we're in and that will reverse itself in the future once consumers feel better so I wouldn't overplay the long term of the energy category.

Speaker Change #164: How how different segments of the category play out I think the energy.

Lots of new of course like salty snacks in the U S category remains surprisingly weak for a couple of questions. Please one maybe just some updated thoughts on the energy drink category and what the recovery. There may look like and then to perhaps comment on the sharp slowdown that we've seen with bell piece is market share and your ability for that brand to regain its lost momentum in the Pepsi system. Thank you.

Speaker Change #165: Category in the U S is clearly being impacted by the traffic and convenience stores and dropping in convenience stores has gone down has been going down I think it's part of the economic cycle that we're in and that will reverse itself in the future once consumers feel better so I wouldn't overplay the long term of the energy category.

Speaker Change #166: With regards to sell shoes.

Thank you Kevin.

Speaker Change #167: I will say the same as I said in the past.

I think the.

Speaker Change #168: We like the partnership.

The energy need state by consumers.

Speaker Change #166: With regards to sell shoes.

Speaker Change #169: We are delivering on our part of the partnership our distribution points are going up our service levels keep going up so we are executing.

Speaker Change #166: I'll say the same as I said in the past.

In the U S on everyone. There well will continue for the foreseeable future thing everybody needs a bit of an energy boost throughout the day and so that need state will remain and I think it's.

Speaker Change #167: We like the partnership we are.

Speaker Change #168: We're delivering on our part of the partnership our distribution points are going up our service levels keep going up so we are executing.

Speaker Change #169: Or part of their partnership with with discipline and highest standards and we remain we remain.

It's going to be up too.

Kind of.

Speaker Change #168: Our part of their partnership with with discipline on highest standards and we remain we remain.

Speaker Change #169: Remain optimistic on the partnership.

Manufacturers are brand owners like us to satisfy those needs whether it's through soft drink through.

Speaker Change #170: Yeah. So thank you very much everybody for the questions and the dialogue.

Speaker Change #168: I remain optimistic on the partnership.

Coffee is routine through energy drink, so I think that that.

Speaker Change #171: Obviously, thank you for the confidence that you've placed with Pepsico with your investment would hope that you all stay safe and healthy and look forward to senior around thank you.

Yes. So thank you very much everybody for the questions and the dialogue.

That opportunity remains and that opportunity will continue to be.

An opportunity for innovation and from brand investments. So they are on.

Speaker Change #169: Obviously, thank you for the confidence that you've placed with Pepsico.

The short term.

Speaker Change #169: With your investment would hope that you all stay safe and healthy.

Speaker Change #171: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

And how how different segments of the category play out I think the energy.

Speaker Change #169: Look forward to seeing Europe. Thank you.

Category in the U S is clearly being impacted by the traffic and convenience stores and traffic and convenience stores has gone down has been going down I think it's part of the economic cycle that we're in.

Speaker Change #170: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

And that will reverse itself in the future once consumers feel better so I wouldn't overplay the long term of the energy category with regards to sell shoes.

I'll say the same as I said in the past.

We like the partnership.

Delivering on our part of the partnership our distribution points are going up our service levels keep going up so we are executing.

Our part of their partnership with with discipline and highest standards and we remain we remain.

I remain optimistic on the partnership.

Yes. So thank you very much everybody for the questions and the dialogue.

Obviously, thank you for the confidence that you've placed with Pepsico with your investment would hope that you all stay safe and healthy.

The senior around thank you.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

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Good morning, and welcome to Pepsico's 2024 third quarter earnings question and answer session. Your lines have been placed on listen only until as your turn ASUR question. Today's call is being recorded and will be archived at www Dot Pepsico Dot com. It is now my pleasure to introduce Mr. Ravi <unk> Senior Vice President of Investor Relations. Mr. <unk> you may begin.

Thank you Kevin and good morning, everyone. I hope everyone has had a chance. This morning to review our press release and prepared remarks, both of which are available on our website.

Before we begin please take note of our cautionary statement, we may make forward looking statements on today's call, including about our business plans and updated 2020 for guidance.

Forward looking statements inherently involve risks and uncertainties and only reflect our view as of today October 8th 2024, and we are under no obligation to update when discussing our results we refer to non-GAAP measures, which exclude certain items from reported results.

Please refer to our third quarter 2024 earnings release, and third quarter 2020 for Form 10-Q available on Pepsico Dot com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward looking.

Shipments joining.

Joining me today are pepsico's, chairman and CEO, Ramon Lavazza, and Pepsico's Executive Vice President and CFO, Jamie Caulfield we.

We ask that you please limit yourself to one question and with that I will turn it over to the operator for the first question.

In order to ask a question or make a comment. Please press star followed by one on your Touchtone phone, we'll pause for a moment, while we compile the Q&A roster.

Our first question comes from Lauren Lieberman with Barclays. Your line is open.

Thanks, Good morning, everyone.

So in the release clear that Frito volumes trended in the right direction in the third quarter category backdrop is still tough and you offered a lot of detail in the prepared remarks on the strategy from here.

Wanted to maybe think about the.

The building blocks to a return to volume growth for that business and if we isolated between let's say core lays in some of the promotional work that you started this summer.

Expansion efforts, we focused on have multicultural offerings and value offerings and then the positive choice more.

More premium end of the spectrum as we think about the path forward.

Do you think about the growth rates for those three if you will segments or initiatives do we think that long term lease gets back to in that kind of core part of the business to be a positive volume contributor or is it more of a.

Kind of hold the line and avoid losses, there, but the other two are really what drives the turnaround as we move forward. Thanks.

Good morning, Lauren Thank you.

Let me step back for a minute.

If we think about the long term growth potential of the <unk>.

Business in the U S.

We are very positive about the long term trends, we are seeing Gen Z.

Snacking patterns and food patterns.

In a way that favor the growth of our category. There are snacking more they're eating mini meals versus large meals and that favors our brands and the number of locations that the carrier will grow so long term, we feel very good about it after three years of <unk>.

Outsize growth for Frito, if you think about the double digit growth. We knew this year was going to be a year of normalization and that's what's happened and the consumer is.

Reassessing patterns and with mobility and some of the financial situation now going forward within that the category will continue to grow at the pays off of the past because of the long term trends that I referred to now the way we're thinking about our brands play in that space for data.

<unk> will continue to be a big driver of the growth and we're looking at potato chips to your question of lais as a multi tier opportunity and the same with theme for all of the other segments. So we have lays clearly is the main main part of the category and within Lais, we will have.

Unsalted I will have flavors, where we know we can create a lot of loyalty and higher value for our consumers will have sub segments like lightly salted or baked that provide even more permissible options for our consumers to stay in potatoes, and they will have.

The upper end of the category brands like Ms. Vicki is that provide.

Our premium experience. So we're thinking about each one of those categories is multi tier where we offer value to some consumers more specific.

Choices for other consumers that want to stay within our brands, but the overarching.

The way, we're thinking about the category is to continue to create growth continue to ensure that the long term the category creates occasions and brings consumers into the we're bringing consumers into the category with our brand programs, our innovation to keep that category growing very healthy and the future for us and for our.

Our customers and Thats, how you should think about the long term value that we can create with the frito lay business.

Thank you one moment for our next question.

Our next question comes from Bryan Spillane with Bofa. Your line is open.

Thanks, operator, good morning, everyone.

So my question is just how we're approaching planning for I guess 25, and maybe just the medium term and remote I guess underneath my question is.

Given that this is sort of in some ways uncharted water in terms of the what we're dealing with the consumer and finding ways to get them to respond.

How is it affecting the way youre thinking about the balance right between investment.

Spending to stimulate demand returns and how it affects the bottom line and I guess.

Really what I'm asking is.

How do you gauge or guard against cutting too much cost in order to preserve the bottom line.

While trying to.

We reaccelerate topline growth.

Great question Brian.

Some big platforms that we have started to deploy and we will continue to deploy over the next few years and these platforms are automation of our of our supply chain.

Warehouses manufacturing distribution centers.

We have invested a lot in data and organizing our data in a way that now we can deploy digitalization at scale throughout the value chain. So from the way we procure to the way we run our factories to our transportation to our go to market, we're really digitalized in the company and that will generate growth and productivity.

<unk> is well we invested was started to create our global business services.

Optimization on in general demand generation budget optimization, we are much better at understanding rois, So theres multiple.

That firms of productivity that will keep deployed in the next few years in the U S and internationally that will give us the optionality to invest in the business as we see best too.

Continue to grow our categories in a responsible way and continue to deliver the financial returns that our investors expect and that we are delivering.

Good we feel good about this year in the sense that even with a very challenging consumer background, we're able to deliver at the high end of our EPS long term target that is a very positive and it makes us feel very confident that the productivity the cost transformation programs that were started.

With the right level of investment will deliver for US again, we're always managing the company for the long term even in a year like this which were challenged on the top line, we keep investing in A&M, we keep investing in the long term transformation of the company, we keep investing in sustainability and making sure that long term.

Where we are using less resources. So we're not taking our eyes off the ball on the long term was we deliver on the short term for our investors.

Thanks to what I think is best in class productivity multi prone program that will continue to deploy in the coming years.

Thank you one moment for our next question.

Okay.

Our next question comes from Camilo, Roger Wallet with Jefferies. Your line is open.

Hey, guys. Good morning, if I can.

Just to follow up on that.

Uh huh.

Other than the details if if organic revenue growth does indeed stay in the sort of low single digit or 1% range can you still deliver 8% on EPS kind of putting all of that together do you have the flexibility to do that for the full year.

Camille as I said earlier I think we have.

A very large productivity.

Set of tools that will keep deploying systematically at the same time with one thing our category. It will grow at a 1% long term, we think our category with investments that we are putting back into the business.

And the health of our brands and the innovation that we have in place for these year at next year, we will deliver much more than 1%. So we're not considering that scenario in our in our in our in our kind of planning, but I would say what do we want to do is control what we can control, which is clearly focused on.

As I said earlier, we believe in the long term growth of both our snacks category on our beverage category both of them are trillion dollar type.

Type of categories with global relevance growing very healthy in many markets around the world and with long term trends that gave us a lot of confidence that these will be.

Sizable growth categories for the long term.

Thank you one moment for our next question.

Our next question comes from Dara <unk> with Morgan Stanley. Your line is open.

Okay.

Hey, good morning.

Good morning.

So Ramon you touched on earlier in the prepared remarks, some of the actions you've taken so far in Frito lay just can you take a step back and give.

Give us your view in terms of the initial payback youre seeing but.

The thrust of the question is really more about going forward is this sort of tweaking those actions in place already to drive greater payoff going forward are there additional actions youre going to lean heavier on and just how do you think about sort of changing the magnitude of investment behind some of those and maybe specifically you can dial down.

One on providing value to consumers that you mentioned.

It is that sort of mean as that more of a promotional focus is it taking less pricing.

Give us a little more tangible detail on that front. Thanks.

Great. Thank you.

I think it's a multi prone.

Strategy and that will continue with that so giving more value on the car is super relevant we feel good about the investments that we put this summer mosley behind the potato chips category on lays that drove.

Growth in the potato chips business.

<unk> gained three points of household penetration and we feel good about that return.

Now, we're going to apply that sequentially to other categories. We will use the fall the winter season.

To put more investments behind the Redoes and Tostitos is that football season, there's a lot of gas.

Gathering and those brands belonged very well in those gathering so on it will be a combination of value in the form of bonus bags and more product to obviously these are large normally large group gathering so <unk> make a lot of sands were giving 20% more product and tostitos on <unk>.

All of the brands that belong in those locations.

Also.

Investing in brand event so.

You will see Tostitos under Idose <unk>.

Brian events around NFL, who will see lays.

Playing some of the classic do us a flavor event. So the brands will have a combination of value and big brand events at the same time, we're working on the long term.

Evolution of the portfolio and that is something that we've been working for many many years. We will continue I think as the success of our of our business long term is based on evolving the portfolio at the speed that the consumer wants to go. So we'll continue to invest on our permissible portfolio. This is this is growing very fast and we continue to.

Good more.

More more legs to that to that business now we have some ships simply pop gardeners, we have smartphones, we have multiple brands.

You guys saw the announcement of CSA, hopefully that will go through legal.

While approval and we will have another leg to that to that portfolio of solutions to keep growing the permissible portfolio. The same with multicultural we see that with the Hispanic population growing and in the United States, We have brands like <unk> and <unk>.

Gamesa that can work very well to that to that group of consumers, where we have those brands in Mexico, we're making them.

Kayla them up India, and the U S and.

And the other lever we're playing.

There is we're entering new channels, where we're trying to expand beyond retail in away from home in other channels, where we can create locations for our brands that right now are underpenetrated. So that's the the multi prone approach.

We're probably going to lean a bit more on value in the first in the first quarters without taking the ball off the long term investments that we're making consistently in in building the portfolio for the future. So you will see us.

And the returns of the different actions and the tactics taking place over the next few months.

Thank you one moment for our next question.

Our next question comes from Philip Buffalo, New with Citi. Your line is open.

Hey, good morning, everyone.

Wanted to ask about the international business.

So Ramon you mentioned in the in the prepared remarks, geopolitical pensions and some weaker consumer across certain markets. So maybe you can talk about those markets that had a negative impact and quantify any impact in the quarter and then kind of like looking at the two pieces of the international business. It seems like the decision.

<unk> has been more in the in a convenience foods side versus the beverage business continues to do well. So what are the drivers in international this slowdown in international in convenient foods is similar to the U S or are there other drivers. Thank you.

Thank you Filippo I'll give you a bit of a sense of that.

There are pockets of strength in international each of their markets like in Southeast Asia, India. Those are markets that are growing nicely.

We see parts of eastern Europe growing nicely, we see Brazil growing at a good pace. There is pockets of growth. There are there other markets, where we're seeing a bit of a deceleration so China is a market where consumers.

Consumers are filling up even more constrained and we're seeing that in our in our food business. Although we're gaining share we're seeing that deceleration from double digit to single digit growth, we're seeing a bit of a deceleration in Mexico. Within this has to be related with elections and some of the noise around around the flows of.

Social money into the economy, hopefully that will that will now stabilize.

And we're seeing parts of Western Europe also challenge weather and other other dynamics there now the middle East is a is a different reality. The fact that we have a big business in the middle East and yes is being impacted by geopolitical situation and I don't think thats going to change in the account.

The months that.

Our teams locally are doing a great job navigating the situation and trying to.

Continue to see.

They are relevant for consumers and drive that business forward.

Yes, your comment on fluids versus beverages, yes, the beverage business is growing a little bit faster than.

Then their foot business globally.

Thank you one moment for our next question.

Okay.

Our next question comes from Peter Grom with UBS. Your line is open.

Thanks, operator, and good morning, everyone.

Maybe just a bit more of a housekeeping question, but with the full year organic revenue guidance still implies a relatively wide range for the fourth quarter. So just any thoughts on where you would expect to fall within that range and then within that any comment on the underlying assumptions embedded clearly things have been more challenged from an external perspective, so just will be.

Curious if you were assuming kind of the current environment holds or would you anticipate category kind of show some improvement here as we exit 2024.

It's Jamie.

I'd say that we really don't expect a huge inflection up or down from.

The conditions that existed in Q3.

Thank you one moment for our next question.

Our next question comes from Robert Moskow with TD Cowen Your line is open.

Hi, Thank you.

Ramon you have you have a very thoughtful strategic approach to investing in frito lay in some areas you are investing in some.

Different different ways in different areas.

Two questions I thought that the plan was to also invest behind Tostitos and promote more I thought it was like similar to the process for delays.

Did you put that into the market or not because we didn't see.

Much yet for Protos Ddos and then secondly regarding the positive choice brands I would've thought that they would be less exposed to value seeking consumer behavior.

Because I think they tend to skew more towards higher income, but but they've been weak can you give us a little bit of.

No.

What progress you've made to improve their distribution and where you are in terms of turning them around.

That's great great questions.

<unk>, we've made some investments in the summer bad debt Tostitos brand has.

A lot of relevance.

This fall season, with all the gatherings around TV watching and tailgating and everything else that happens in the U S. So we as we will be putting.

Incremental investment behind Tostitos.

As I mentioned is going to be around.

The brand investment so programs on consumer investment brand investments and also value in this sense off.

20% more bonus bags and some other.

Additional.

<unk> for consumers.

That will show will create additional.

In iteration for the brand and hopefully growth.

And we're doing the same with <unk>, where we're investing.

Bit more sequentially, which started with lay's now we're moving to the readers are ido as being a brand that responds very well to any sort of activity and we're seeing it already in the month of in the month of September October how the brand is responding.

And we will sequentially improve the other the other part of the business at.

With the pandemic mobility and returning to two.

Two are.

Different bottomed by consumers that is being impacted is multi packs and variety packs was a huge driver of business. We're seeing that part of their business kind of slowing down a little bit bodies affordability. So some some some of the larger banks have been impacted now we offered 10 count.

Multi bags too.

Before it was more 18 on 24 are now 10 count that is growing very fast parts of the month, the consumers gravitate into or lower purchase that is growing very well. We're also gave you a bonus bags to a multi bags plus two UNH plus three units. So these will be all additional value that I think we will have a positive impact.

In the in the business in the in the coming months now when it comes to permissible we have been working on permissible now for many many years boson, making our core products more permissible.

You see that our levels of Saudi Omar levels off of <unk> are being reduced and that is creating a positive halo for all our brands, but also create a portfolio of brands.

That are as you say not necessarily premium I think that the penetration is still limited around.

Between 10, and 20% in some of those platforms about already beyond what is that premium consumer it's really democratizing positive choices to consumers.

Sun chips.

Simply range, which.

It covers most of our large brands. It is it is it smartphones. It is bulk gardeners and as I said, some new addition to the family hopefully we see it as we keep investing in those we're seeing penetration increasing were seeing positive development of those brands and everything.

It's impacted by affordability, even for medium income consumers are medium high income consumers. So we don't see this as a long term derailleur, we see something that will continue to provide the right portfolio add distribution make sure visibility is at the levels that it needs to be to generate trial be.

Our intentional with where we invest money behind these brands to generate additional trial.

<unk> that the mater is that today with digital advertising on all the information and insights that we have we can be much more precise and thoughtful and.

And have much higher returns on how we build these platforms, which as I said earlier, there are meaningful they already $2 billion.

And these are this is a large a large business that is growing and will continue to grow for us in the long term.

Thank you one moment for our next question.

Our next question comes from Steve Powers with Deutsche Bank. Your line is open.

Hey, good morning, everybody. Thank you.

So just maybe clarify remote if you could talk a little bit more about.

What drove the step down between 4%.

Organic sales growth for the year and now low single digits the balance between how much was driven by.

Some of the changes in international markets that you talked about versus less improvement than expected and some of the domestic businesses.

I'm not 100% clear.

The <unk>.

And then within that within Frito lay specifically you've talked a lot about investments both in incremental brand building and then sort of.

Okay sharpening price points in the value equation, I guess I'm gleaning from that that we should potentially expect segment pricing to the flip negative as we go forward.

As you realize those investments I just wanted to play that back and see if that was an appropriate assumption.

Hey, Steve it's Jamie.

On the revision from the.

Four to low single digits combination of recovery of the consumer in the U S. Frankly, it's been slower than we had anticipated and then to a lesser degree the geopolitics of impacted.

Nashville, that's probably a half point drag on <unk>.

Total loss Pepsico revenue growth in the quarter.

As far as pricing goes it's a bit complex we're.

We're investing and affordability, where it makes sense, but we're investing in a number of levers to stimulate demand and.

Too soon to too soon to call on what the pricing outlook is going forward.

Thank you one moment for our next question.

Okay.

Our next question comes from Andrew <unk> with Jpmorgan. Your line is open.

Thank you good morning, I wanted to step back and think about international coking as food.

I also need to see an increased level of investment.

Marketing and seeing flat volumes in key regions.

Pam.

While also keeping momentum in Europe that was that has been.

A very nice place, where I know ramone and you'll have a lot of experience in there and negotiating with with retailers.

And so do we see I mean I have my question Eastern will tend on the affordability that we saw also in the U S is that something that we should be bracing for in places like lifetime, it's difficult in Mexico, I understand the tough comps, but going forward looking at ways to kind of dialing in.

In our jam in Latam.

And on the Frito lay North America.

<unk>.

That data.

I check in.

And a follow up in the Reinvestments you mentioned should we prepare for margins to remain pressured it clean thanks overlapped summer next year.

And therefore, we saw a sizeable to 100 basis points declining operating margin philosophy delay I appreciate that thank you.

Thank you Andrea.

I've seen your question on international.

I think we've always been very good at.

The affordability and their revenue management in in Latam for our food business and we.

We manage well the leather the prize leather and the entry points on the prize bags in how we execute that in the in the <unk>.

Point of sale in our in our in our rocks on an hour.

Front facing to the consumer so we will continue to dial that up.

The truth is that in Latam as well, we have great brands and we continue to invest in those brands and make sure that we carry.

Now to the consumer and to our brands versus strong competitors that we have in the areas. So you'll see a balance between both of that is not a new capability is something that we've been executing for a long time, we're perfecting that as we use leverage.

The data and the information that we have and will have more precise execution of tools versus more broad broad based execution that we might have had in the past. So I think as a capability that we could keep optimizing body will be critical.

Driving the business performance in the coming years now when it comes to.

Q3 2024 PepsiCo Inc Earnings Call - Q&A

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