Q4 2024 The Coca-Cola Co Earnings Call
Okay.
Thank you.
Okay.
Other than that.
[music].
Okay.
Okay.
Yes.
Yes.
Hello.
In other way for you Fred one.
<unk> got the stuff in there.
And if you believe or we can make them.
[music], if you believe that we can make them everyday.
Speaker Change: At this time I'd like to welcome everyone to the Coca Cola company's fourth quarter and full year 'twenty 'twenty four earnings results Conference call.
Speaker Change: Today's call is being recorded if you have any objections. Please disconnect at this time.
Speaker Change: All participants will be on listen only mode until the formal question and answer portion of the call.
Speaker Change: I would like to remind everyone that the purpose of this conference is to talk with investors and therefore questions from the media will not be addressed.
Speaker Change: You'd have to participants should contact Coca Cola's media Relations Department, if they have any questions.
Speaker Change: I would now like to introduce Mr. Robin Halpern, Vice President and head of Investor Relations Ms. Hawthorne you may now begin.
Speaker Change: Good morning, and thank you for joining us I'm here with James Quincey, Our chairman and Chief Executive Officer, and John Murphy, Our President and Chief Financial Officer, We've posted schedules under financial information in the investors section of our company website. These reconcile certain non-GAAP financial measures that may be referred to this morning too.
Speaker Change: Our results as reported under generally accepted accounting principles.
Speaker Change: You can also find schedules in the same section of our website that provide an analysis of our gross and operating margins.
Speaker Change: This call may contain forward looking statements, including statements concerning long term earnings objectives, which should be considered in conjunction with cautionary statements contained in our earnings release and in the company's periodic SEC report.
Speaker Change: Following prepared remarks, we will take your questions.
Speaker Change: Please limit yourself to one question reenter the queue to ask any follow up now I will turn the call over to James.
James Quincey: Thanks, Robin and good morning, everyone.
James Quincey: We are pleased with our 2024 results, which include volume growth robust organic revenue growth and comparable growth and operating margin expansion.
James Quincey: This led to a 7% comparable earnings per share growth.
James Quincey: Alright, nearly double digit currency headwinds and the impact of bottler refranchising.
James Quincey: These results reflect the continuation of delivering on our long term commitments through our all weather strategy. We've demonstrated we have agility to navigate what comes at us.
James Quincey: To grow comparable earnings per share.
James Quincey: Given the strong momentum of our business with confidence we can deliver on our 2025 guidance and longer term objectives.
James Quincey: With that as context I'll next provide perspective on our industry and review our business performance across our segments in the fourth quarter.
Speaker Change: Then I'll explain how we are executing our strategy by amplifying what he's working on fine tuning where needed.
Speaker Change: John will end by discussing our financial results in more detail and providing an overview of our 2025 guidance.
Speaker Change: Okay.
Speaker Change: One of our fundamental strengths is that we operate in a great industry with steady growth no matter, how you slice it by consumer by customer by beverage category by geography, we have vast opportunities ahead of us.
Speaker Change: During the quarter, we leveraged the power of our portfolio and the local expertise of our franchise system to capitalize on these opportunities.
Speaker Change: We want overall share and had broad based share gains across our global beverage categories.
Speaker Change: We're making progress across our total beverage portfolio delivering ongoing growth in sparkling soft drinks as well as momentum in other categories like value added dairy and tea, which are reaching global scale, while remaining tailored to local consumer needs.
Speaker Change: And we're continuing to strengthen the alignment across our system and we believe that global franchise model, which operates locally is an advantage to drive long term balanced growth.
Speaker Change: During the quarter, while our operating environment remains dynamic consumer demand held up well and our industry remains strong.
Speaker Change: Yes.
Speaker Change: Starting in Asia Pacific.
Speaker Change: In ASEAN and South Pacific, we grew volumes during the quarter and benefited from successful integrated marketing campaigns like food mob.
Speaker Change: Which was activated in over 7000 outlets and led to trademark Coca Cola volume growth.
Speaker Change: Our system also drove affordability by increasing renewable offerings and focusing on attractive passports.
Speaker Change: With global offerings contributed to approximately one third of Afghanistan specific volume growth in 2024.
Speaker Change: In China. Despite continued macro headwinds we grew volumes during the quarter and while early we are seeing improved trends across our business.
Speaker Change: Trademark Coca Cola continues to gain share and sprite fanta a minute maid each improved volume performance.
Speaker Change: Our system is stepping up integrated execution in 2024 by accelerating placement of cold drink equipment and activating integrated marketing campaigns in key channels.
Speaker Change: In Japan, and South Korea, we grew volume during the quarter innovation was a strong contributor to growth led by a resurgence of biotech and a number of other brands, we're continuing to benefit from steady performance from trademark Coca Cola and stepped up integrated execution in key channels.
Speaker Change: In India, our business rebounded nicely during the quarter and we grew volume we recruited consumers with innovative marketing campaigns that linked Coca Cola with music.
Speaker Change: We had travel and thumbs up with movies and Mazda is now at 38 billion dollar brand.
In 2024 system added approximately 440000 outlets to our digital customer platforms in India, which provides more opportunities to better tailor our product price and packaging offerings.
Speaker Change: Moving on to EMEA.
Speaker Change: In Europe volume declined during the quarter with mixed performance across western and eastern markets.
Speaker Change: Despite volume pressure, we grew both revenue and profit.
Speaker Change: We're engaging consumers with experiential marketing campaigns like the world needs more centers for trademark Coca Cola and by linking our brands to new occasions, like sprite with spicy meals.
Speaker Change: Also innovation velocity, a multiyear innovation success rates, both performed well in 2024.
Speaker Change: We're seeing good traction on fuze, tea, and Powerade zero, Jack and Coke and absolute and sprite.
Speaker Change: In Eurasia, and middle East Despite a confluence of continued macro headwinds we returned to volume growth during the quarter.
Speaker Change: We are emphasizing local news of that business I think positive responses.
For example, the made in May by campaigning, Turkey led to strong volume growth for trademark Coca Cola.
Speaker Change: <unk> T also had good momentum across the region.
Speaker Change: Our system is driving affordability and stepping up integrated execution by increasing cooler placement and share with visible inventory during the year.
Speaker Change: In Africa volume declined during the quarter, driven primarily by pressure in North Africa, and Nigeria, and partially offset by strong volume momentum in South Africa.
Speaker Change: Action during the quarter by adjusting our pack price architecture to further drive affordability.
Speaker Change: Our system is investing for the long term, adding refillable offerings, placing more cold drink equipment and increasing manufacturing capacity in 'twenty 'twenty four.
Speaker Change: In Latin America, despite some macroeconomic pressures, we grew volume revenue and profit during the quarter.
Speaker Change: We drove trial and recruited weekly plus drinkers for trademark Coca Cola in 2024 by better linking the brand to the meal occasion.
Speaker Change: Also to drive balanced top line growth our system focused on increasing single serve offerings.
Speaker Change: Over 90% about fragmented trade customers are now on our systems digital customer platforms, allowing for greater opportunity to tailor offerings to customers individual needs.
Speaker Change: Lastly, in North America, we grew both transactions and volume and it had robust top line and profit growth during the quarter.
Speaker Change: Trademark Coca Cola unfair life remain leaders in at home retail sales growth.
Speaker Change: Sparkling flavors gained share during the quarter due to successful limited time innovations like sprite winter Spice, Cranberry and Santa Beatriz juice and stepped up integrated execution focused on increased point of sale messaging and increased share visual boule inventory.
Speaker Change: Consumers responded well to value messaging in away from home channels, and we increased distribution of key affordable and premium offerings and benefited from product package and channel mix in the quarter.
Speaker Change: To sum everything up we have good momentum in that business, we're responding to market dynamics locally to execute on that global objectives.
Speaker Change: While we are delivering on our near term commitments. We're also investing to improve execution build capabilities and get more granular across our strategic growth flywheel.
Speaker Change: And network marketing model is integrating product digital life and retail experiences and we're harnessing passion points to connect with consumers a more personalized waste.
Speaker Change: One Great example, Panther Halloween was our first ever global Halloween activation and with scale to nearly 50 markets.
Speaker Change: Partnering with Warner Brothers Pictures, we created a limited time time to be confused but wanted Apple flavor.
Speaker Change: Siemens scan packages to access personalized experiences and we replicated the beetle juice after life train taking of a train stations tram and metros.
Speaker Change: Pain was activated in store with our largest customers and contributed to sparkling flavors share gains during the quarter.
Speaker Change: Our culture increasingly emphasize it I think boldly learning and scaling successes.
Speaker Change: This year for the first time, a Coca Cola Christmas that was created with generative AI <unk>.
Speaker Change: Combining emerging technology with human creativity, which allowed us to produce the out faster and at a lower cost.
Speaker Change: The power of emerging technologies like generative AI are still at early stages, and we will continue to lead in its right to our approach.
Speaker Change: We're seeing tangible results from our marketing transformation over the past three years trademark Coca Cola as retail sales have increased approximately $40 billion.
Speaker Change: According to time magazine, Coca Cola and minute maid and satellite with named world's best brands in their respective beverage categories in 2024.
Speaker Change: While we're building capabilities in marketing, we're also focusing on innovation that prioritizes bigger and bolder beds.
Speaker Change: Each of our innovations as a clear objectives.
Speaker Change: Sometimes we innovate to create short term bus like Coke and Oreo Sprite winter Spice Cranberry.
Speaker Change: In other instances, we innovate for lasting impact.
This year, we focused on sustaining investments behind key innovations to improve multi year success rates and drive greater impact this is paying off.
Speaker Change: Fuze tea grew retail value three times faster than the tea category Chopper.
Speaker Change: Topo Chico some borders continued its momentum.
Speaker Change: Zero sugar realized strong growth.
Speaker Change: In 2020 for innovation contributed strongly to revenue growth and our innovation success rates improve versus prior year.
Speaker Change: We're excited about our innovation pipeline for 2025.
Speaker Change: Moving across our topline flywheel system is investing heavily in digital capabilities and sticking to the fundamentals of commercial excellence to accelerate consumer recruitment increased consumption and win in the market.
Speaker Change: Ensuring product availability is one of our systems greatest strength that we saw.
Speaker Change: Still have tremendous opportunity.
Speaker Change: While our system improve share visible inventory in 2024, and I brands are found in 33 million outlets. There remains ample headroom to increase outlet coverage reduce out of stocks and better tailor our offerings with the right placements.
Speaker Change: [noise] basket incidence is another opportunity winning just one point of global beverage incidence translates into over $40 billion in additional retail sales.
Speaker Change: To drive basket incidence and our system is focused on better activating integrated marketing campaigns in key channels.
Speaker Change: Increasing point of sale displays and winning impulse zones outside the traditional beverage on them.
Speaker Change: Finally, cold drink equipment is one of the strongest consumption drivers in our systems toolbox with approximately 14 million units of cold drink equipment present in our approximately 33 million customer outlets, we have significant opportunity to drive consumption by placing more cold drink equipment in 2020 for our system.
Speaker Change: <unk> to add nearly 600000 coolers.
Speaker Change: Strong commercial execution is enabled by our revenue growth management capabilities, which fueled both topline growth and margin expansion, we're driving affordability and premium amortization across our total beverage portfolio.
The strong elasticities, we're realizing today are a testament to the progress we're making in this area.
Speaker Change: By focusing on availability basket incidence and cold drink equipment, coupled with great marketing innovation and revenue growth management.
Speaker Change: System recruited weekly gross drinkers grew volume one share in 2024.
Speaker Change: While we made steady progress executing at or where the strategy in 2024, we're operating with the mindset that we're only just getting started.
Speaker Change: If we turn the page to 2025, we anticipate the year will bring both opportunities and challenges.
Speaker Change: While we expect the external environment will be dynamic several underpinnings remained constant one we operate in a great industry to we have many opportunities available to us and we are prime to capture these and deliver sustained performance.
Speaker Change: Hi.
Speaker Change: On a full portfolio of brands pervasive distribution system and the unwavering dedication of our system employees are clear advantages.
Speaker Change: Next Tuesday at Cagny I look forward to sharing more about how we're leading to deliver results in all types of backdrops and I encourage everyone to listen with that I'll turn the call over to John.
John Murphy: Thank you James and good morning, everyone.
John Murphy: We closed the year with strong fourth quarter results.
John Murphy: And as James said earlier, we delivered 7% comparable earnings per share growth in 2024.
John Murphy: On top of 6% average comparable earnings per share growth over the prior five years.
John Murphy: During the fourth quarter, we grew organic revenues 14%.
John Murphy: Unit case growth was 2%, which is in line with our multiyear trend.
John Murphy: Concentrate sales grew three points ahead of unit cases, driven primarily by two additional days in the quarter.
John Murphy: And the timing of concentrate shipments.
John Murphy: Our price mix growth of 9% was driven by two items.
Approximately eight points of pricing split somewhat evenly between normal pricing actions across our markets.
John Murphy: And intense inflationary pricing and a handful of markets experiencing currency devaluations.
John Murphy: But approximately one point of favorable mix.
John Murphy: Excluding the impact of intense inflationary pricing.
John Murphy: Organic revenue growth was above our long term growth algorithm.
John Murphy: Comparable gross margin was up approximately 160 basis points.
John Murphy: And comparable operating margin was up approximately 80 basis points.
John Murphy: Lots of Refranchising had a greater benefit to comparable gross margin.
John Murphy: Currency headwinds.
John Murphy: A larger impact to comparable operating margin.
John Murphy: Putting it altogether fourth quarter comparable EPS of.
John Murphy: 55.
John Murphy: Was up 12% year over year.
John Murphy: Despite 11% currency headwinds.
John Murphy: And 4% headwinds from Buster Refranchising.
John Murphy: Okay.
John Murphy: Free cash flow, excluding the IRS tax litigation deposit was $10 $8 billion in 2024, an increase of 11% versus prior year.
John Murphy: This increase was primarily driven by strong business performance.
John Murphy: And timing of working capital initiatives.
John Murphy: Partially offset by higher capital expenditures and higher tax payments.
John Murphy: In 2024, adjusted free cash flow conversion was 93%.
John Murphy: Which is within our long term targeted range.
John Murphy: Our balance sheet is strong.
John Murphy: Net debt leverage of one eight times EBITDA.
John Murphy: Is below our targeted range of two to two five times.
John Murphy: Yeah.
John Murphy: If you include our latest estimate of $6 two.
John Murphy: $2 billion related to our fair life contingent consideration payment.
John Murphy: Our expected net debt leverage.
John Murphy: Would be at the low end of our target range.
James Quincey: As James mentioned 2025.
James Quincey: Likely bring both opportunities and challenges.
John Murphy: Enabled by our all weather strategy, we have demonstrated our ability to deliver on our objectives and drive long term growth.
John Murphy: Our 2025 guidance Bill on the enduring momentum of our business.
John Murphy: We expect organic revenue growth of 5% to 6% and comparable currency neutral earnings per share growth of 8% to 10%.
John Murphy: Both of which reflected delivery at the high end of our long term growth algorithm.
John Murphy: We continue to focus on driving balanced volume and price mix.
John Murphy: We anticipate intense inflationary pricing will play a smaller role in 2025.
John Murphy: We will moderate throughout the year.
John Murphy: Bottler Refranchising is expected to be a slight headwind to comparable net revenues.
John Murphy: Comparable earnings per share as we cycle the impact of bottler Refranchising in 2024.
John Murphy: We continue to invest appropriately behind our brands, but also driving productivity across all areas of marketing.
John Murphy: Next week at Cagny will discuss further our marketing transformation and enhance resource allocation capabilities give.
John Murphy: Give us confidence in our ability to continue to drive more productivity.
John Murphy: We expect interest expense to be elevated versus prior year. We believe the step up is manageable and we're not expecting significant leverage or deleverage below the line.
John Murphy: Based on current rates on our hedge positions, we anticipate an approximate 3% to four point.
John Murphy: Currency headwind to comparable net revenues.
John Murphy: And an approximate 6% to seven point currency headwind to comparable earnings per share for full year 2025.
John Murphy: Our underlying effective tax rate for 2025 is expected to increase to 28%, which.
John Murphy: Which is driven primarily by the impact of several countries enacting the global minimum tax regulations.
John Murphy: All in we expect comparable earnings per share growth of 2% to 3% versus $2 88 in 2024.
John Murphy: Excluding the fair life contingent consideration payment, we expect to generate approximately $9 5 billion.
John Murphy: Our free cash flow in 2025.
John Murphy: Through approximately $11 7 million in cash from operations less approximately $2 2 billion in.
John Murphy: And capital investments.
John Murphy: Included in this guidance are two items to highlight.
John Murphy: One a $1 2 billion transition tax payment.
John Murphy: An increase of approximately $240 million.
John Murphy: 2024.
John Murphy: This is the final year that we will make a payment related to the tax cuts and jobs Act of 2017.
John Murphy: Number two we expect that part of the timing of working capital initiatives that benefited 2020 for free cash flow will reverse and impact 2025 free cash flow.
John Murphy: Driven by our underlying cash flow generation, we have flexibility to invest in our business and return capital to shareowners.
John Murphy: Significant portion of our expected capital investment.
John Murphy: Build capacity for fair life and to continue to invest in our system.
John Murphy: In India and Africa.
John Murphy: With respect to acquisitions and divestitures were making good progress on our agenda.
John Murphy: Since 2006, we've added $9 billion brands via acquisition.
John Murphy: Importantly, only three of these brands.
John Murphy: $1 billion brands at the time of acquisition demonstrating progress in scaling acquisitions.
In 2024, we realized $3 5 billion.
John Murphy: Gross proceeds from Refranchising.
John Murphy: Bottling investments as a percent of consolidated net revenue.
John Murphy: Let's turn 14% down from 52% in 2015.
John Murphy: Return on invested capital is up six points over the same time.
Related to capital return, we have an unwavering priority to grow our dividend as we've done for 62 consecutive years.
John Murphy: Our dividend is supported by our long term free cash flow generation.
John Murphy: In 2024 dividends paid as a percent of adjusted free cash flow was 73%.
John Murphy: On share repurchases, we've typically repurchase shares to offset any dilution from the exercise of stock options by employees in the given year.
John Murphy: Our capital allocation policy.
John Murphy: Prioritizes agility.
John Murphy: Committed to driving the long term health of our business.
John Murphy: And creating value for our stakeholders.
John Murphy: There are some considerations to keep in mind for 2025.
John Murphy: We expect bottler refranchising to have a greater impact to comparable net revenues and comparable earnings per share during the first quarter.
John Murphy: As we cycle the impact of Refranchising, the Philippines, which closed during the first quarter of 2024.
John Murphy: We expect the productivity benefits.
John Murphy: Previously discussed to have a larger impact during the latter half of 2025.
John Murphy: Due to our reporting calendar there will be two less days in the first quarter and one additional day in the fourth quarter.
John Murphy: So in summary, we are successfully executing our all weather strategy to deliver on our objectives.
John Murphy: Okay.
John Murphy: System remains incredibly focused and motivated.
John Murphy: We will continue to invest with discipline and believe we are well positioned to drive quantity topline growth and.
John Murphy: And deliver continued margin expansion.
John Murphy: A hallmark of our company since its inception has been our ability to create enduring value overtime and.
John Murphy: We expect to continue to do so.
John Murphy: And with that operator, we are ready to take questions.
Speaker Change: Ladies and gentlemen to ask a question you will need to press star one on your telephone.
John Murphy: Sorry, Your question Press Star one again.
John Murphy: The interest of time, we ask that you. Please limit yourself to one question. If you have any additional questions you may rejoin the queue.
Speaker Change: Our first question comes from Lauren Lieberman from Barclays. Please go ahead. Your line is open.
Lauren Lieberman: Great. Thanks, good morning, everyone.
Lauren Lieberman: The business seem to Buck the trend that we've seen from many other staples companies between strong <unk> results and the conviction in upper end of the sales algorithm for 2025. So I'd just be curious to hear more from you about your perspective about the consumer environment globally, particularly.
Lauren Lieberman: Clearly in developed markets, where U S sentiment has been so mixed western Europe, there have been some flags on certain markets lagging. So curious your kind of global perspective on the consumer environment. Thanks, So much.
Speaker Change: Sure Good morning, Laura.
Lauren Lieberman: I think the.
Lauren Lieberman: The overall consumer environment as per the.
Lauren Lieberman: Stable in the sense that there's good economic growth on a broad based view around the world.
Lauren Lieberman: Includes both the developed and the emerging markets.
Lauren Lieberman: If I look at the developed markets whilst it is.
Lauren Lieberman: Absolutely true that the lower income segments in the U S and perhaps more even more notably in Europe in Western Europe on the disposable income pressure on happened in 'twenty, four and quite possibly will continue for some part of 'twenty five the rest of the consumer base is actually still.
Lauren Lieberman: <unk>.
Lauren Lieberman: Gaining in terms of disposable income and is spending maybe spending a little more in the U S. North America, then that western Europe, whether whether there was more direction to saving but a pretty strong.
Lauren Lieberman: Sustained demand level across the developed world.
Lauren Lieberman: And similarly in the emerging markets, yes, it's a little more volatile and ups and downs, but in aggregate again, you see pretty robust or enduring consumer demand in the quarter. We saw India rebound, we saw trying to get a bit better.
Lauren Lieberman: The middle East got a bit better that still doing pretty well in Latin America is a little softer perhaps in Africa, but overall.
Lauren Lieberman: We see continued robustness.
Lauren Lieberman: And growth across consumers, but we need to respond to with all the strategies that we have.
Lauren Lieberman: It's not going to be a one size fits all we need to focus on delivering and then with the marketing and the innovation and the execution and particularly the affordability and premium amortization. So the demands there.
Lauren Lieberman: And I think what you see in the fourth quarter has been our ability to focus on what we have to do to get a good result for the company and that's what we're confident in continuing to 2025.
Speaker Change: Our next question comes from Dara <unk> from Morgan Stanley. Please go ahead. Your line is open.
Dara: Hey, good morning.
Dara: So just on the 5% to 6% organic revenue growth forecast for 2025 can you just give us a bit more granularity on the balance between volume that you see as well as price and mix.
Dara: And just wanted to focus on your plans on the pricing component in 2025, you mentioned there is some stress on the low end consumer and a few markets. After inflation in recent years, but clearly with your Q4 results. The overall consumer seems to be handling pricing from coke well. There's also FX pressures. So there's just a number of volatile external circumstances.
Dara: Just how does that impact how you manage pricing in 2025, and how that might be different than a typical year either on the pricing or the mix front. Thanks.
Dara: Yes sure.
Dara: Look I think let's start from the top level down on 25.
Dara: Our long term algorithm, we called out we wanted to be at the top end. So five to six and expect in the long term a balance between volume and price I would say two to three of each it.
Dara: It seems more likely in 'twenty, five there'll be a little more price and a little less volume.
Dara: But there will be volume growth.
Dara: And obviously there'll be price growth, but perhaps a little weighted a little more price than volume than long term year, but still solid continued.
Dara: Volume momentum, which has been an enduring feature of what we have pursued over the last number of years, which is not just keeping people in that franchise, but growing our franchise for the long term and so that's the headline of what we expect to see.
Dara: And I would say like if you take 2020 full where you've got a kind of.
Dara: Our headline price mix of about 10% half of that is from these high inflation countries, which we expect to largely drop out in 2025. So another way of thinking of it is really ex high inflation, you had about 5% price mix in 2024, and youre going to see that kantar.
Dara: <unk> to moderate as inflation has moderated.
Dara: Down to a kind of a slightly lower number in 2025 and largely the drop out of these high inflation countries in 2025.
Dara: Help give you a factor and so we feel we got a level of actual pricing in the marketplace that is proportionate unreasonable relative to inflation and relative to what we can support through the actions we're taking.
Dara: Across the whole flywheel from the marketing the innovation the execution the GM through affordability in a pretty monetization on older commercial execution.
Dara: Our next question comes from Bryan Spillane from Bank of America. Please go ahead. Your line is open alright. Thanks, operator, good morning, everyone.
Speaker Change: Maybe just to pick up on <unk> question.
Speaker Change: Maybe John can you.
James Quincey: And James can you give us just just two perspectives one as we think about the organic sales growth.
Speaker Change: For 2025, just given some of the I guess some of the moving parts. We saw in <unk>, just how should we kind of think about it from a phasing perspective.
Speaker Change: Does the I guess this is the pricing from some of the emerging markets of inflationary commodity countries kind of fade as we move through the year. So that's the first one on the second maybe if you could also just give us a context of.
Speaker Change: 5% to 6% organic sales growth and how that stands against kind of industry growth. If you could give us some perspective on kind of what the exit rate was for the for the industry and maybe what you're thinking about for next year and then just last one I forgot to call. We should have called this out last time, but the hold music.
Speaker Change: Is amazing.
Speaker Change: Nice change and I, just want to make sure that that gets recognized robyn doing their job.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Thanks, Brian well I'm glad to less common without a question so [laughter].
Speaker Change: Our son.
Speaker Change: Yes.
Speaker Change: On the guidance for the for the <unk>.
Speaker Change: Well I'm not going to get into a lot of commentary and inside the quarter.
Speaker Change: We do have two less days in the quarter.
Speaker Change: Coming out of 24.
Speaker Change: Recent momentum going into it.
Speaker Change: On the on.
Speaker Change: On the pricing front.
Speaker Change: Some some inflation.
Speaker Change: And from the more intense markets.
Speaker Change: In Q1.
Speaker Change: Of which we expect to moderate throughout the year.
Speaker Change: <unk>.
Speaker Change: On the volume phasing itself.
Speaker Change: I think for us yes.
Speaker Change: Q2, I'd say, it's probably the.
Speaker Change: The more the more challenging uphill.
Speaker Change: I would say of the quarters ahead.
And as I say on the intense inflationary markets that we've highlighted in 24 as Jim said sanctioned the headline numbers.
Speaker Change: See that moderating throughout the year.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: On the on the industry growth.
Speaker Change: <unk>.
Speaker Change: If I I mean.
Speaker Change: Clearly, we are planning to and expect and.
Speaker Change: Aim to gain share so to the extent that we are.
End up growing 5% to six then that moves based on the idea that the industry is growing at a more normalized level. If you look at the long term growth rates. The industry you tend to get a four or five.
Speaker Change: So we are absolutely expecting the industry growth rate also motor which is kind of what was happening in Q4, the underlying rate. If you take out the high inflation countries is kind of six or seven in the fourth quarter.
Speaker Change: We are gaining share so again.
Speaker Change: It's very consistent with this idea of we've been talking about which is <unk>.
Speaker Change: As inflation moderates.
Speaker Change: We see a normalization of both the industry growth rate.
Speaker Change: Both right with us being the long term winner in the industry.
Speaker Change: With ongoing robust industry growth.
Steve Powers: Our next question comes from Steve Powers from Deutsche Bank. Please go ahead. Your line is open.
Speaker Change: Hey, guys. Good morning, Thank you.
Steve Powers: I guess I guess moving moving down the income statement.
Steve Powers: Your outlook seems to imply some pretty strong underlying margin and profitability progress just net of the FX pressures and a higher tax rate. So can you talk about some of the key drivers there and then.
Steve Powers: I guess similar to Brian's question any timing considerations, we should keep in mind over the course of the year.
Steve Powers: Beyond just the number of days in each fiscal quarter. Thank you.
Steve Powers: Sure maybe I'll start and then journal journal weigh in on some of these considerations.
Steve Powers: So firstly, yes, there is some implied.
Speaker Change: Margin expansion in 2025.
Speaker Change: Coming from some of the marketing expenditure and some of the SG&A.
Speaker Change: <unk> is the culmination of many of the programs we've been putting in place over the last number of years to continue not just to get effectiveness, but to get efficiency.
Speaker Change: And the simplest example is the marketing transformation, where it is helping US continue take the Christmas, adding in Q4 last year, which we which we made regenerative AI as a small example, it was both quicker and cheaper to make the AD.
Speaker Change: So what youre seeing coming into 2025 is some of the fruition of work that's been going on across the organization, including.
Speaker Change: The marketing transformation that is producing some productivity in 2025, but it is important to say that we are.
Speaker Change: Not backing off.
Speaker Change: Bias to invest for growth. This is not less marketing this is more productive spend.
Speaker Change: And so our mode of operation going into the year. We will continue to be we believe that will be growth in 2025 and the industry.
Speaker Change: We are going to invest from the marketing all the way down through the system into the commercial.
Speaker Change: Levers in order to continue to drive growth as we find pluses and minuses around the world of course, we will adapt and be flexible, but this is about leaning into growth continuing to invest to drive the franchise and being able to capture some of the benefits of the transformational work that's been going on open a number of years, John will add some considerations sure.
Speaker Change: Let me go up a little bit.
Speaker Change: And talk about gross margin.
Steve Powers: Steve So.
Steve Powers: Can provide some additional commentary.
Steve Powers: We're not building.
Steve Powers: An enormous amount of expansion on the gross margin front into our guidance.
Steve Powers: We do expect to.
Steve Powers: Continue to have some underlying.
Steve Powers: Spansion.
Steve Powers: You alluded to the FX.
Steve Powers: Largely maybe offset by by currency.
Steve Powers: We are anticipating.
Steve Powers: <unk> 425, there's quite a lot of moving parts inside of the gross margin equation. So is.
Steve Powers: As I said, we have not.
Steve Powers: For guidance purposes built in.
Steve Powers: An enormous amount of expansion commodities, whether it be in the low single digit range overall, some pressures on the agricultural.
Steve Powers: Particularly to some coffee those are a big part of our base.
Steve Powers: We have.
Steve Powers: The usual set of levers.
Steve Powers: We will deploy two.
Steve Powers: To cover those.
Steve Powers: But for as I said for guidance purposes.
Steve Powers: And assume modest.
Modest expansion at the gross margin line as Tim said, we have been anticipating.
Steve Powers: For quite some time.
25 environment and.
Steve Powers: Sort of the more for Sam Moore for less mantra is certainly alive and well.
Steve Powers: Okay.
Speaker Change: Our next question comes from Filippo <unk> from Citi. Please go ahead. Your line is open.
Filippo: Hi, good morning, everyone.
Filippo: I wanted to ask you your thoughts on just the global trade environment, obviously with tiredness coming more into play here.
Filippo: Seems like on your supply chain is likely largely localized in most countries, but can you talk about some exposure in terms of the import export and also just a secondary impact on commodities I know a lot of it is.
Filippo: On your bottling system, but just thoughts on the recent patterns Soc on aluminum and steel. Thank you.
Filippo: Yeah. Thanks.
Filippo: Clearly, there's a it's a dynamic macro environment.
Filippo: Out there.
Filippo: As you know.
Filippo: As commodities change for whatever reason a pull down obviously, we are number one objective is to look at how we mitigate through that.
Filippo: And whether it's the the reason the aluminum tariffs or any other tariff based or frankly, whether based or any other variation in the input commodities.
Filippo: We do a number of things one we have hedging programs in place that look to assure supply and price going out.
Filippo: Secondly, as the relative prices of different sources of ingredients and inputs change of course, we look at mitigation productivity efficiency.
Filippo: Adjusting where we get a.
Filippo: Materials from all of that goes into the equation to constantly manage how this goes through net net as John just mentioned, we have been we are expecting more variation in agricultural industrials notwithstanding.
Filippo: <unk> recent actions, we will manage through it as you said.
Filippo: We are predominantly a local business when it comes to making each of the beverages.
Filippo: Vast majority of everything that is consumed in the U S has made in the U S. Similarly, with virtually every country around the world and so while it's a global business is very local so yes every bottler will be importing something from somewhere.
Filippo: As a piece of the puzzle, but the economics are more predominantly local than they are global and so it's a piece of the puzzle we need to manage through that.
Filippo: John said, we have that we believe on the.
Filippo: Under control from a point of view all of the sustaining gross margin.
Speaker Change: No doubt the environment will continue to be dynamic, but we will continue to manage and mitigate and adjust and be agile and flexible our way through the year and just one additional comment is just supply chain continuity continues to be.
Speaker Change: I think for many industries and ongoing challenge for a variety of reasons.
Speaker Change: 24 was no there was no stranger to that.
Speaker Change: Our cross enterprise procurement team.
Speaker Change: Managing a vast network than in.
Speaker Change: In addition to the economics, just making sure that we can continue to supply our markets around the world consistently.
Speaker Change: As a key priority.
Speaker Change: And an important advantage I think two to enjoy as well in the many markets that we're in.
Speaker Change: Our next question comes from Bonnie Herzog from Goldman Sachs. Please go ahead. Your line is open.
Bonnie Herzog: Alright, Thank you and good morning.
Bonnie Herzog: I guess thinking about the new administration.
Bonnie Herzog: Henshall regulate regulatory changes.
Bonnie Herzog: What percentage of your domestic portfolio might be subject to potential changes and then how quickly can you pivot alright adapt your portfolio. If some of these changes are implemented and then I'll ask it.
Bonnie Herzog: They come more topical again lately, but how are you thinking about potential impacts on consumption from gel PD one drugs.
Bonnie Herzog: Have you seen any impact and has your thinking on this potential headwind has changed in terms of your strategy innovation et cetera. Thanks.
Bonnie Herzog: Well Bonnie.
Bonnie Herzog: I'm tempted to start with the answer to the first question by saying you win the prize for the Vegas question. So far this year with what might happen subject to changes.
Bonnie Herzog: Many things that could happen out there in the world and then of course, we do.
Bonnie Herzog: And are you planning on regulations on economics on all sorts of things and we will adapt as and when they come more specifically.
Bonnie Herzog: The <unk> ones.
Bonnie Herzog: As we've commented.
Bonnie Herzog: On previous calls we continue to see anecdotal evidence of the impact of <unk> on consumption of food and beverages.
Bonnie Herzog: So far.
Bonnie Herzog: Our take is it's not a big aggregate factor pulled the beverage industry or the non alcoholic beverage industry witnessed the volume for our sales was up 1% in.
Bonnie Herzog: In the fourth quarter in North America, So we continue to see.
Bonnie Herzog: Pretty sustained momentum in North America, there is anecdotal evidence that people consume slightly less alcohol perhaps.
Bonnie Herzog: Or do some switching in non alcoholic beverages.
Bonnie Herzog: But overall, we're seeing sustained momentum and we are a total beverage company. So we believe whether it's <unk> drugs or changes in adaptational to regulation ingredients.
Bonnie Herzog: Our objective is to have the biggest possible.
Bonnie Herzog: Toolbox, all the ingredients of Super high quality and safety, which we use to make a total beverage portfolio that works for consumers and we believe we can adapt to anything that comes at us.
Speaker Change: Our next question comes from coming out of <unk> from Jefferies. Please go ahead. Your line is open.
Bonnie Herzog: Yes.
Speaker Change: Everyone. Good morning.
Speaker Change: John you laid out a long list of very substantial cash payments that are made this year last year, almost all of which.
Speaker Change: It will be behind you very soon so can you maybe just talk about how.
Speaker Change: How you think about cash.
Speaker Change: Our capital allocation when you are on the other side of it.
Speaker Change: It would be buybacks, whether it would be more aggressive around M&A.
Speaker Change: Magnitude of the change of the amount of cash will have on hand next year versus this year. Some substantial I'd like to see how you might think about differently.
Speaker Change: Thank you.
Speaker Change: Thanks, Matt Yeah, let me maybe answer.
Speaker Change: In two parts first of all the <unk>.
Speaker Change: I don't foresee that.
Speaker Change: A substantial change in our focus.
Speaker Change: <unk> supports the underlying business momentum.
Speaker Change: Our momentum.
Speaker Change: That has.
Speaker Change: And secondly, as we just talked about in our guidance, we will continue to support the dividend. So those two areas you can assume.
Speaker Change: Well remain top priorities.
Speaker Change: As we get into 'twenty six it's a little early to anticipate exactly what 26 will deliver for us, but as you said clearly we had the transition tax bill would it.
Speaker Change: In the rearview mirror.
Speaker Change: Some of the M&A almonds likewise.
Speaker Change: It will give us the opportunity to.
To take a closer look us.
Speaker Change: The M&A and the.
Speaker Change: Share repurchase agenda so.
Speaker Change: I think it's premature to two.
Speaker Change: To get too specific.
Speaker Change: But 26 might bring for us.
Speaker Change: <unk>.
Speaker Change: But.
Speaker Change: Im looking for is actually too.
Speaker Change: So having to deal with that challenge and in the next year or so.
Speaker Change: We also have as you as you're well aware, we also have a keen focus on the overall health.
Speaker Change: So the balance sheet.
Speaker Change: And we will take into account the.
Speaker Change: The puts and takes on that.
Speaker Change: We continue to have a tax.
Speaker Change: Tax case.
Speaker Change: And the next couple of years to deal with so.
Speaker Change: The name of the game for me is too.
Speaker Change: Need to have more.
Speaker Change: Manage in our flex the amount or some of the opportunities that may present themselves.
Rob <unk>: Our next question comes from Rob <unk> from Evercore ISI. Please go ahead. Your line is open.
Speaker Change: Great. Thank you.
Speaker Change: So Walmart has created now I guess, what they call the modern soda shelves.
Speaker Change: And I'd love to get your thoughts on that category broadly speaking.
Speaker Change: Is this something that is a fact.
Speaker Change: In your view or is this something that.
Speaker Change: That represents a some kind of departure and is just very responsive to consumer needs.
Speaker Change: Is it something like fear life, where you just have a better product and how do you look to play in this so called modern soda area that Walmart seems to at least have some confidence in thank you.
Speaker Change: Well, yes look it's great news that people are innovating and willing to create new brands and dedicate more shelf space.
Speaker Change: So the beverage industry, which is I think goes to the whole idea. This is a vibrant industry with also growth. So that's the first one secondly.
Speaker Change: We can we are total beverage company, we look to compete everywhere, we see in during consumer demand and traction.
Speaker Change: Including some of the stuff goes yeah look in the end. These are these all soda beverages that are great tasting the central idea.
Speaker Change: And I think to the extent that is enduring we'll take a really hard look at it.
Speaker Change: Hum.
Speaker Change: But I think the most important thing to take from this is.
James Quincey: Is the confidence in the overall industry a beverage used continues to grow and as John alluded to and we'll talk more at Cagny. When you look at the track record of the Coca Cola company in terms of creating organically and scaling small bolt on M&A into 1 billion dollar brands we are.
James Quincey: We are by far and away the clear leaders in the industry and the windows.
Speaker Change: Our next question comes from Chris Carey from Wells Fargo. Please go ahead. Your line is open.
Chris Carey: Hi, everyone.
Speaker Change: James You mentioned.
Agricultural commodities.
Speaker Change: You also I think you said something to the effect of industrial commodities or perhaps moving a bit last but youre watching developments I'm, assuming you're speaking to.
Speaker Change: Aluminum.
Speaker Change: Can you just maybe provide some context number one on on how incremental moves a little bit on might impact your cost per case outlook number one.
Speaker Change: And just related there is this element of the system will need to respond to incremental inflation from aluminum can you just talk about comfort that.
Speaker Change: Portability and volume durability will not be impacted if the system needs to respond to climbing inflation. So it's a little bit of a two part question on the impact to the model, but also a bit forward booking and what may be required to protect the modeling the impact on the consumer in the coming months.
Speaker Change: Thanks, so much.
Speaker Change: Yes sure.
Speaker Change: I mean, firstly this is predominantly an impact in the north American or in the U S business with the let's say the North American business, which is obviously a piece of the puzzle. So from a total company perspective bear in mind. This is just one of the four segments.
Speaker Change: Largely speaking as we sit here at the date.
Speaker Change: <unk>.
Speaker Change: Of course as it relates to our strategies.
Speaker Change: Around ensuring affordability on ensuring consumer demand if one package.
Speaker Change: Suffers some increase in input costs, we continue to have all of the packaging offerings that will allow us to compete in the affordability space. So for example, if aluminum cans become.
Speaker Change: More expensive, we can put more emphasis on PT bottles et cetera et cetera. So we will adapt the packaging strategy.
Speaker Change: In function of changes in the relative input costs of what goes into that so that is part of the total adaptation plan that we use around the world.
Secondly, I don't believe a part of the question in the second half is do you think this is going to fundamentally on demand the ability of the system to do well in volume in 2025. The short answer is no I think we control enough variables that we can adapt and mitigate.
Speaker Change: Our way through what is happening because it's a combination of hedging which.
Speaker Change: Which we use on the key materials.
Speaker Change: It's an opportunity to.
Speaker Change: To do mixed management between different packaging materials and of course, we're going to look at where we are the supply drops because it's all about relative pricing to the extent relative pricing changes, we can seek to adapt and so.
Speaker Change: <unk>. This is mitigated boules are manageable.
Speaker Change: One of the dynamic elements all of 2025 that I think we can get through.
Speaker Change: Our next question comes from Andrea Teixeira from Jpmorgan. Please go ahead. Your line is open.
Andrea Teixeira: Thank you operator, and Hi, James John I have a question on Mexico, and then a follow up on mix on Mexico, you have obviously managed high close regulation taxes, well and arguably you count on one of the basketball team partners there.
Andrea Teixeira: But can you comment on the playbook and if you're embedding a deceleration in volume understand and can you talk about the potential risk of recession or or would we maintenance is that the stronger dollar, meaning obviously, yes.
Andrea Teixeira: Kansas to their pockets.
Andrea Teixeira: Actually offsetting does slow down and then on the second point you will spend a fair amount of time discussing the accelerating innovation results, which are remarkable.
Andrea Teixeira: This strong delivery in North America, I believe you posted like 12% growth in price mix, how much is that driven by field life or away from home recovery and should we expect of comparisons should lead to a deceleration there or are you still see a lot of potential for salt life distribution and potentially better execution on on premise I had thank you.
Andrea Teixeira: Wow Okay.
Andrea Teixeira: That's a lot of questions in there.
Andrea Teixeira: Let me try and pocket into two north American pricing about half of the North American pricing that you see in Q4 is mix.
Andrea Teixeira: And therefore, you can basically kind of pop that relative to 2025.
Andrea Teixeira: And so.
Andrea Teixeira: <unk>.
Andrea Teixeira: And it's not just fair life, but if you just take just take half of that and called out price mix that is going to continue to moderate as you go into 2025 in the North American cents and the mix will also moderate in 2025, we will we will continue to grow fat life in 2025, but we are keeping the.
Andrea Teixeira: Runaway success of the of the of the products, we are reaching the need to get the New York factory that we've been building up and running in orders and continue unconstrained growth. So you will see some moderation.
Andrea Teixeira: Of the <unk> growth in 2005, which will obviously then moderate the mix is much more normalization of U S price mix in 2025, and then Mexico, I mean unpacking the Mexican playbook is a longer conversation, but I think it is a place where <unk> loans, we have had a dedicated and consistent.
Andrea Teixeira: Execution of the play, but the overall playbook whether it's.
Andrea Teixeira: Great quality marketing right quality innovation, great quality execution, and great quality, our GM, so pricing options I mean, the one place you can go find a package at almost every price point is Mexico.
Andrea Teixeira: One of the broadest beverage portfolios in the world in terms of covering off all the categories. So it's been a long term dedication by the system in Mexico to build the total beverage company with a product.
Andrea Teixeira: On a package in a price point for everyone everywhere.
Andrea Teixeira: And of course, we commented just on the peso.
Andrea Teixeira: We did call out FX headwinds in 2025.
Andrea Teixeira: <unk> has taken on a different nature that we're not expecting large impacts to come from intense inflation countries. We're expecting the <unk> headwinds that come from some of the more normal, let's say emerging markets like Mexico.
Andrea Teixeira: As part of the headwind do you see on the peso conversion to the U S dollar for 2025.
Andrea Teixeira: Our next question comes from Peter Grom from UBS. Please go ahead. Your line is open.
Speaker Change: Thanks, operator, and good morning, everyone. So James I was hoping just to follow up on your response to <unk> question.
Speaker Change: I apologize if I misheard this but I think you mentioned organic growth to be a bit more weighted to price relative to volume, which is entirely surprising and not to get too granular, but I wasn't sure. If you were implying that you were expecting volume growth to kind of fall short of the 2% to 3% growth, we typically see or just at the lower end of that range.
Speaker Change: Just ask that in the context of 2% unit case volume growth exiting the year you touched on a lot of these more challenged markets getting better in the quarter. So we've seen.
Speaker Change: Some pretty nice momentum exiting the year and <unk> exit rate would be a good place to start but I'm not sure. If there's maybe some offsets or areas of concern that we might not be thinking about thanks.
Speaker Change: Yeah, I think <unk> got what I said to Dara correctly.
Speaker Change: Yes, I mean, if you just take 2020 full we did 2% in the fourth quarter, we did 1% overall for the year.
Speaker Change: So yes, I mean, what I was saying is implying that two one to kind of floating around that sort of range with a compensating factor.
Speaker Change: On the pricing side, so we still get it.
Speaker Change: We still get up into the five to six.
Speaker Change: So I think <unk> got it clearly and I think.
Speaker Change: Also I think Jon made a comment earlier in terms of the timing during the year that Q2 is clearly going to be a tougher cycling quarter, but overall for the year, we feel we're coming in with momentum.
Speaker Change: They're all.
Speaker Change: Decent number of unknowns on the dynamic environment in 'twenty five we believe we can manage through and from a volume perspective.
Speaker Change: I think I'd like I like to think is it going to be a little better than 24 overall, but it's in that sort of ballpark.
Speaker Change: Our next question comes from Charlie Higgs from Redburn Atlantic. Please go ahead. Your line is open.
Speaker Change: Yeah, Hi, James Johnson.
Speaker Change: Question on India, Please which had a good 2024 and more broadly it's been a great market for you over the past few years I saw it in Q4 that you've re franchised, 40% to a local partner and I was just wondering if you could comment on that and what attributes that the coupon it brings that perhaps could even et cetera, the engine business.
Speaker Change: To the next level. Thank you.
Speaker Change: Thanks, Charlie I just came back from a.
Speaker Change: Trip to India, So maybe I'll take this one.
Speaker Change: Yes.
Speaker Change: The Refranchising program that we've had in place.
Speaker Change: <unk> continues to move ahead.
Speaker Change: And there is no different to other parts of the World. We look for we look for a certain profile of partner.
It's a R.
Speaker Change: Ambitious as we are to capture the opportunities we have.
Speaker Change: The capital who have see.
Speaker Change: Ability to build capability over time.
Speaker Change: And we believe that our new partner there.
Speaker Change: Ticks the box.
Speaker Change: Handsomely.
Speaker Change: All of these attributes. So you can think just think of it as another chapter in the Refranchising program.
Speaker Change: Im not just for India, but for those remaining in our portfolio.
Speaker Change: And the Indian market has got a tremendous amount of runway ahead.
Speaker Change: The environment there is.
Speaker Change: It is pretty vibrant.
Speaker Change: Tremendous competitive set.
Speaker Change: And we believed us.
Speaker Change: The <unk> group coming in.
Speaker Change: It's going to add tremendously to our abilities to continue to step change our execution in the marketplace.
Speaker Change: And as we continue to work on the Refranchising program will.
Speaker Change: Well advised in the coming in the coming months and into next year as to how that shapes out.
Speaker Change: Our next question comes from Bill Chappell from tourist Securities. Please go ahead. Your line is open.
Bill Chappell: Thanks. Good morning, just wanted to follow up on kind of the commentary on the Hyperinflationary environment in your kind of comment.
Speaker Change: It moderating and I understand it moderating but.
Speaker Change: We believe the pricing a lot of the pricing you took was kind of more of a second half so that will carry through.
Speaker Change: Thank you.
Speaker Change: Countries have really slowed down in their inflationary environment. So are you, saying that you are kind of done with pricing, there and or that you would be taking price cuts. It seems like I understand you have a general guidance for this year, but it seems like the hyperinflation environment, there's not a real reason for them to to moderate but so much.
Speaker Change: At least for the next couple of quarters.
Bill Chappell: Bill Yes.
Speaker Change: Absolutely not taking.
Speaker Change: The Philadelphia the pedal in terms of.
Speaker Change: Pulsing through where we have a lot of input costs.
Speaker Change:
Speaker Change: Coming in so it's not that we are not going to go.
Speaker Change: B policy through the input costs in those marketplaces.
Speaker Change: Yes.
Speaker Change: It was very concentrated these high inflationary country and there has been inflationary moderation I mean, if you look at Argentina for the for the sake of singular example, the monthly inflation rate has dropped markedly through 2024, I think it's down a few percent amongst now for <unk>.
Speaker Change: Is that a month, so you definitely see a moderation, yes youre right.
Speaker Change: Youll see more of it in the first half and the first quarters than you will in the back end of the year.
Speaker Change: Inflation is definitively dropped in a lot of these countries, but it was very concentrated in a handful Argentina a.
Speaker Change: A couple of the African countries.
Speaker Change: In Turkey, and so inflation has come down.
Speaker Change: We will continue if it doesn't moderates.
Speaker Change: All of the countries that fall into this category.
Speaker Change: Because its input costs go up we will pass those through in price, even though we look to execute a lot of affordability strategies, we have to pass through the cost and those sorts of environments, because it's just too overwhelming.
Speaker Change: Question comes from Robert Moskow from TV Cowen. Please go ahead. Your line is open.
Speaker Change: Hi, Thanks, I wanted to.
Speaker Change: Maybe push a little bit more on your commentary that you can you've changed your mix.
Speaker Change: Packaging to react to aluminum tariffs or higher aluminum costs.
Speaker Change: Is there any way to kind of delineate this like like how much of a of a mix shift as necessary to go more towards plastic glass toward.
Speaker Change: Aluminum cans.
Speaker Change: The event of a sharp increase in can cost it may not be a fair question, but okay.
Speaker Change: Okay.
Speaker Change: Is it a once in a 1% change in mix.
Speaker Change: <unk> big enough to really influence the cost structure or does it have to be something much bigger than that.
Speaker Change: Look I think we are in danger of.
Speaker Change: Exaggerating the impact of.
Speaker Change: 25% increase in the aluminum price relative to the total system, it's not insignificant, but it's not going to radically change a multibillion dollar.
Speaker Change: U S business and.
Speaker Change: And packaging is only is a small component of the total cost structure. So.
Speaker Change: Firstly.
Speaker Change: It's not a multimillion dollar $1 billion problem relative to the input cost it's a much more manageable number and so between mitigation of supply chain sourcing.
Speaker Change: Weights of the cans price increase of the cans at some level potentially.
Speaker Change: Switch to the piece of it's a manageable problem in the context of the total U S business.
We should.
Speaker Change: You should not conclude that this is some huge swing factor in the U S business. It is.
Speaker Change: It's a cost it'll have to be managed it would be better not to have it relative to the U S business, but we are we are going to manage our way through.
Speaker Change: Our next question comes from Michael Lavery from Piper Sandler. Please go ahead. Your line is open.
Speaker Change: Thank you. Good morning, just wanted to unpack Asia Pacific a little bit more.
Speaker Change: Price mix down there partially off set by some pricing.
Speaker Change: But in the full year market share commentary, which I was a little bit apples and oranges.
Speaker Change: South Korea, and Japan grew or gained share and then Indonesia, and Bangladesh declined or lost share.
Speaker Change: That would seem like a positive for mix. So maybe how do you reconcile those what are some of the moving parts in and just help us understand that a little bit better.
Speaker Change: Sure I think the biggest factor here.
Speaker Change: In Asia Pacific in Q4 is what we are cycling from last year.
Speaker Change: So I would encourage you as you look at Asia Asia, but it's true overall, but Asia Pacific in particular for the reasons you called out you've got some very.
Speaker Change: Developed markets, like Japan, and Australia, and some very emerging market like Bangladesh and Indonesia in that relative volume performance. It can make a big difference to mix. So what youre what youre seeing is it is a base effect.
2023 coming over but.
Speaker Change: But I would encourage any analysis of.
Speaker Change: Price mix in Asia Pacific to be multi quarter because it just it is just very choppy for the very reasons you just called out.
Speaker Change: Okay.
Speaker Change: Perfect. Thanks, very much everyone.
Speaker Change: To summarize we are winning in the marketplace, we're going to continue to maintain our agility and focus on getting better on everything we do we believe we are well well positioned to deliver on our 2025 guidance and create value for our stakeholders over the long term.
Speaker Change: We look forward to discussing more next week at Cagny.
Speaker Change: Thanks for your interest the investment in our company and for joining US. This morning. Thank you very much everyone.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Hello.
Speaker Change: Thank you Frank.
Speaker Change: Yes.
Speaker Change: And then Tim if you will.