Q1 2025 The Coca-Cola Co Earnings Call
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At this time I'd like to welcome everyone to the Coca Cola Company's first quarter 2025 earnings results Conference call.
Today's call is being recorded if you have any objections. Please disconnect at this time.
All participants will be on listen only mode until the formal question and answer portion of the call.
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.
Media participants should contact Coca Cola's Media Relations Department, if they have any questions.
Speaker Change: I would now like to introduce MS. Robyn Halpern, Vice President and head of Investor Relations is helping 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.
Speaker Change: Morning to results as reported under generally accepted accounting principles.
Speaker Change: Can also find schedules in the same section of our website that provided an analysis of our gross and operating margin.
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 ups.
Now I will turn the call over to Jim.
Jim: Thanks, Robin and good morning, everyone.
Jim: Our results in the first quarter reflect the continued execution of our all weather strategy and demonstrate the resilience of that business as we navigate the dynamic external environment.
Jim: We delivered 2% volume growth and organic revenue growth at the high end of our long term growth algorithm.
Jim: <unk> delivered comparable gross and operating margin expansion.
Jim: With this as context with grounded as starting point of human Centricity.
Jim: Our first quarter results would not have been possible without the actions of our people around the world.
Jim: To express my gratitude to our system associates, who are adapting quickly and creating enduring value.
Jim: But as we look to the remainder of the year, we will continue to be consumer and customer centric based on what we know today. We believe we can achieve our 2025 guidance.
Jim: This morning, I'll provide further detail on our first quarter business performance and we'll discuss the current operating environment.
Jim: And I'll explain how we are improving execution and investing to strengthen our system.
Jim: Joe will also discuss our financial results and provide further commentary on the outlook for the rest of the year.
Jim: During the quarter some markets improved sequentially, while other markets face macroeconomic uncertainty and geopolitical tensions that impacted consumer confidence and consumption behaviors.
Jim: Despite this backdrop, we delivered robust organic revenue growth.
Jim: Through our stepped up capabilities are better than ever system alignment, we're getting more granular and tailoring our execution to win locally in key geographies categories and channels.
Jim: During the quarter, we grew volume across all global beverage categories, one value share by three key metrics overall share at home and away from home.
Jim: However, as we look across our top country category combination, we still have opportunities to further improve our performance.
Jim: Across our markets, we leveraged our global scale and local expertise respond to complex dynamics in the quarter.
Jim: In North America, we grew revenue and profit in one value share, but we were not satisfied with our volume performance.
Jim: In addition to challenges with severe weather and calendar shifts volume was impacted by weakening consumer sentiment as the quarter progressed, particularly among Hispanic consumers.
Jim: Bright spots include continued volume growth for Coca Cola zero sugar another good quarter for their life on top of Chico's to Boris and continued traction with foodservice customer renewals and new accounts.
Jim: Our system has quickly pivoted to prioritize the most impactful investment opportunities these emphasizing faster decision, making and greater agility to accelerate volume growth.
Jim: In Latin America, while volume was flat we grew both organic revenue and comparable currency neutral operating income.
Jim: Brazil, and Argentina had strong volume performance, while momentum in Mexico was weaker due to cycling strong volume growth in the prior year calendar shifts.
Jim: Diminished consumer sentiment, partly stemming from geopolitical tensions.
Jim: Our system has taken Swift action in Mexico.
Jim: We've learned from best practices in other market by messaging affordability with value packages and key titles.
Jim: By launching the at Chile, Mexico campaign to further build trust with consumers occur.
Jim: Across Latin America, our system is leveraging connected packaging and digital customer platforms that drive long term growth.
Jim: In EMEA, we grew volume organic revenue and comparable currency neutral operating income.
Jim: In Europe volume declined with mixed performance in both western and eastern markets due to a range of factors.
Jim: To drive demand for our brands, we are focused on affordability and launching a full integrated marketing activations.
Jim: <unk> with trademark Coca Cola, we launched the everyday tasty celebrations campaign for the meal occasions in over 20 markets leveraging local influences.
Jim: So Santa we launched a partnership with Xbox to recruit Gen Z drinkers.
Jim: In Eurasia, and Middle East, we drove strong volume growth of one value share.
Jim: In Turkey, Despite continued external challenges and business performance improved with.
Jim: We're leveraging our learnings from the past year to better understand consumer motivations and pivot jewelry shifts in demand.
Jim: Our efforts across the region to emphasize the local nacelle system, while driving affordability and partnering closely with customers are taking hold.
Jim: Lastly in Africa, we grew volume despite cycling strong growth in the prior year and dealing with double digit inflation.
Jim: We're driving affordability with refillable offerings and value packages and were engaging consumers by scaling global integrated marketing campaigns at a local level, including Walter Fanta Sprite spicy meals.
<unk> owns social to point out.
Jim: Finally in Asia Pacific, we delivered volume organic revenue and comparable currency neutral operating income growth.
Jim: In ASEAN and South Pacific volume declined as strong performance in the Philippines was more than offset by weaker performance in Thailand and Indonesia.
Jim: One value share in the region.
Jim: We are focused on driving affordability with refillable offerings and attractive absolute price points, increasing outlet coverage and accelerating placement of cold drink equipment.
Jim: In China, our system focus on improving execution is paying off and led to volume growth.
Jim: We delivered impactful integrated marketing activations around the lunar new year and investing to drive growth in away from home channels.
Jim: Trademark Coca Cola had strong volume performance, while strike is getting back on track.
Jim: In India, we had strong volume growth across our portfolio of global and local brands.
Jim: System added nearly 350000 outlets and increased household penetration.
Jim: Also our system increased cooler placement.
Jim: Added approximately 100000 customers to digital customer platforms.
Jim: In Japan, and South Korea, we drove volume growth of one value share with solid performance from <unk>.
System is benefiting from stepped up execution across key channels.
Jim: Putting it altogether, our business proved to be resilient during the quarter and we are prepared to respond to changing consumer dynamics as our external environment continues to evolve.
Jim: While we are navigating near term market dynamics with focused on capturing the boundless opportunities. We discussed at Cagny, we're building capabilities to further our strategic edge.
Jim: Starting with our portfolio of loved brands.
Jim: Our total beverage portfolio office consumers choice, whether it be by brand package size of package type.
Jim: We have 30 global or local billion dollar brands that address a broad range of consumer need states and drinking occasions.
Jim: 30% of our volume is from low or no calorie beverages of 68% of our products in our portfolio have less than 100 calories per 12 ounce serving.
Jim: We also have a diversified mix of affordable and premium offerings.
Jim: By staying consumer centric and offering choice, we're seeing growth across multiple elements of that portfolio.
Jim: Moving onto our marketing and innovation agenda.
Jim: In our ongoing transformation continues to fuel that top line growth.
Jim: With studio X, we producing tailored digital marketing at scale and with speed and we're measuring the impact in real time.
Jim: For example, during lunar new year, we scaled and integrated campaign with trademark Coca Cola across China, Japan, Vietnam, and other Asia Pacific markets.
Jim: Consumer access personalized digital experiences through our systems connected packaging.
Jim: The campaign leveraged social media live events and increased displays and customer outlets contributing to trademark Coca Cola volume growth in Asia Pacific during the quarter.
Jim: We're also excited about the global return of our iconic share a coke campaign.
Jim: <unk> 2025 year duration of this campaign offered digital experiences and increase share ability and customization.
Jim: Return of share a coke is the first chance to Gen Z to experienced as much love campaign.
Jim: We are investing in multiyear innovations and prioritizing fewer bolder launches to drive greater impact and improve our success rate.
Jim: For example, we're continuing to divest of fuze tea, which contributed to value share gains in the category during the quarter.
Jim: We expanded fuze tea sub order, he now to Spain, and fused ICT, Canada.
Jim: In the U S. Coca Cola Orange cream is off to a good start with approximately $50 million in retail sales during the quarter.
Jim: At the end of February we launched simply pulp.
Jim: First prebiotic soda in select locations and channels across the country.
Jim: We're excited about our ability to test learn and scale successes over time.
Jim: Lastly, we are striving to optimize our broader ecosystem.
Jim: This extends far beyond the company and our bottling partners. If you include our suppliers approximately 6 million people service our ecosystem Coca Cola is for everyone and we strive to contribute to each of the communities we serve.
Jim: We believe our franchise model, which leverages global scale, but prioritizes local this is an advantage in today's environment.
Jim: Our system, primarily produces and distributes our brands locally.
Jim: Also aimed to procure locally where possible.
Jim: Most of the value we create in terms of jobs and retail sales.
Jim: As in the local markets for example, according to a recent economic impact study by Stuart Red Queen in the U S. Our ecosystem contributes approximately 860000 jobs.
Jim: Ultimately 58 billion.
Jim: Annual gross domestic product.
Jim: In Brazil, our ecosystem contributes approximately 575000 jobs and over $15 billion annually to the gross domestic product.
Jim: While it is reasonable to assume global trade tensions and broader macro uncertainty may persist in the near term and could impact consumer sentiment. The building blocks behind our long term growth opportunities are unchanged. We continue to benefit from three primary factors. Firstly, we operate in a resilient industry with predictable growth.
Jim: Second while barriers to entry in our industry low barriers to scale in our industry are high.
Jim: Lastly, we have significant headroom to develop our industry and gained share and we believe we are prime to capture these opportunities and our portfolio of power as demonstrated by our $30 billion brands a pervasive yet local distribution are key differentiators.
Jim: System continues to prioritize agility consumer centricity and close partnership across our ecosystem to drive long term growth.
Jim: In summary, it is early in the year, we noted that the external environment is dynamic.
Jim: Enabled by our all weather strategy, we will continue to expand our toolkit to respond to the opportunities and challenges ahead. Thanks.
Jim: Thanks to the unwavering dedication of our system employees. We are confident we can achieve our objectives with that I'll turn the call over to John.
John Murphy: Thank you James and good morning, everyone. During the quarter, we pivoted as needed to continue delivering on our objectives.
John Murphy: We grew organic revenues, 6%, which reflects performance at the high end of our long term growth algorithm.
John Murphy: Unit case growth was 2%.
John Murphy: In line with our multi year trend.
John Murphy: Concentrate sales were one point behind unit case sales.
John Murphy: As the impact of two fewer days in the quarter was partially offset by the timing of concentrate shipments.
John Murphy: Our price mix growth of 5% was driven primarily by pricing actions across our markets.
John Murphy: Partially offset by approximately one point of unfavorable mix.
John Murphy: Pricing from intense inflationary markets contributed to approximately one point of price mix growth down from approximately five points and full year 2024.
John Murphy: Comparable gross margin increased approximately 30 basis points and comparable operating margin increased approximately 130 basis points.
John Murphy: Both were driven by underlying expansion and a benefit from bought a refranchising, partially offset by currency headwinds.
John Murphy: Putting it all together first quarter comparable EPS of <unk> 73.
John Murphy: <unk> increased 1% year over year, despite 5% currency headwinds dilution from Boston Refranchising elevated net interest expense and an approximate two point increase in our effective tax rate.
Free cash flow, excluding the fair life contingent consideration payments was approximately $560 million an increase versus prior year.
John Murphy: During the quarter, we made our final $6 2 billion payments related to our acquisition of fair life, which continued to deliver strong performance.
John Murphy: We're expecting fair lifes growth to moderate during the remainder of 2025 in advance of bringing additional capacity online.
John Murphy: Our balance sheet remains strong with our net debt leverage of two one times at beta which is at the low end of our targeted range of two to two five times.
John Murphy: We're confident in our long term free cash flow generation and continue to have balance sheet capacity to pursue our capital allocation agenda.
John Murphy: Which prioritizes and unwavering commitment to drive growth and support our dividend, while staying flexible and opportunistic.
John Murphy: Before I discuss our guidance I would like to provide perspective on the current global trade environment and the actions, we're taking to manage our business.
John Murphy: But our system, primarily executes locally.
John Murphy: We're not immune to global trade dynamics.
John Murphy: Based on what we know today, the dynamic tariff landscape could impact pockets of our systems cost structure as.
John Murphy: As well as consumer sentiment in our markets.
John Murphy: At this time, we believe we have numerous levers to help manage the impact which is contributing to our current 2025 guidance.
John Murphy: Enabled by our all weather strategy, we believe our business model is the flexibility needed to allow us to deliver on our near term commitments.
John Murphy: Our current 2025 guidance takes into consideration the underlying momentum of our business and what we know today about our external environment.
John Murphy: We continue to expect organic revenue growth of 5% to 6%, but now expect comparable currency neutral earnings per share growth of 7% to 9%.
John Murphy: Both of which reflect delivery in line with our long term growth algorithm.
John Murphy: Foster Refranchising is still expected to be a slight headwind to comparable net revenues and comparable earnings per share.
John Murphy: Most of the impact of bunch of Refranchising at cards during the first quarter of this year as we cycle the impact of Refranchising, the Philippines, which closed during the first quarter of 2024.
John Murphy: Based on current rates and our hedged positions. We now anticipate an approximate two to three points of currency headwind to comparable net revenues.
John Murphy: And an approximate 5% to six point currency headwind to comparable earnings per share for full year 2025.
John Murphy: Our underlying effective tax rate for 2025.
John Murphy: Still expected to be 28%.
John Murphy: Which is over a two point increase versus prior year.
John Murphy: All in based on what we know today, we continue to expect 2025 comparable earnings per share growth of 2% to 3% versus $2 <unk> in 2024.
John Murphy: There are some considerations to keep in mind for 2025 during the second quarter, we are cycling a tougher volume comparison from the prior year.
John Murphy: While we're taking action to address consumer dynamics.
John Murphy: Some key markets and are seeing encouraging signs, we expect recovery to take some time.
John Murphy: We continue to expect the productivity benefits.
John Murphy: I discussed in February to be weighted towards the latter half of 2025.
John Murphy: Lost due to our reporting calendar there will be one additional day in the fourth quarter.
John Murphy: To sum it up we remain focused on the execution of our all weather strategy.
John Murphy: In our well positioned despite macro complexity.
John Murphy: And uncertainty in the remainder of 2025.
John Murphy: Thanks to the power of our portfolio and the partnership of our system. We are confident we will continue to create enduring value for our stakeholders.
Speaker Change: 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 to withdraw your question Press Star one again in 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 Dara <unk> from Morgan Stanley. Please go ahead. Your line is open.
Speaker Change: Hey, good morning.
Speaker Change: Another strong quarter clearly in Q1, but you did maintain the all in full year 2025 earnings guidance, which.
Speaker Change: Implies constant currency earnings growth is now lower by 100 basis points with FX improving.
So is that just because it's early in the year in a difficult environment. It doesn't make sense to raise overall earnings, particularly with volatile currency or are there discrete factors that are incremental as we think about full year currency neutral earnings and maybe I can just extend that question also the unit cases.
Speaker Change: 2%, Great result in the quarter comps do get tougher going forward, there's some geopolitical.
Speaker Change: Risk in theory, so just any thoughts around your ability to drive continued corporate unit case growth going forward in this more difficult environment that you referenced.
Speaker Change: Thanks, Dara on the currency front as we said in the script currency guidance is based on current rates and hedge positions.
Speaker Change: And it's early in the year, we have most of our G 10 pretty much hedged, but theres still a lot of volatility out there with emerging markets. So.
Speaker Change: We are being I think prudent to.
Speaker Change: Get flow through.
Speaker Change: I am sure there is more to come in the coming months on the currency front, particularly in the emerging world. So.
Speaker Change: Unit case volume not dissimilar.
Speaker Change: HUD.
Speaker Change: And overall a strong start when you look at the global portfolio, thanks to the strength of that portfolio.
Speaker Change: I highlighted in my in my scripted remarks.
Speaker Change: As you just alluded to.
Speaker Change: We're cycling.
Speaker Change: A strong second quarter.
Speaker Change: We have had a number of actions.
Speaker Change: To address some of the challenges we've seen in the first quarter.
Speaker Change: And we expect those actions to have an impact, but it will not be immediate.
Speaker Change: We're.
Speaker Change: I'd highlight the full year guidance.
Speaker Change: Comfortable and confident with.
Speaker Change: Like we've seen over the last I'd say 12 to 13 quarters.
Speaker Change: Each quarter has its own personality nowadays.
Speaker Change: And so I'd look at the full year versus let's say the dynamics of any one quarter.
Speaker Change: Our next question comes from.
Bryan Spillane: Our next question comes from Bryan Spillane from Bank of America. Please go ahead. Your line is open.
Bryan Spillane: Thanks, operator, good morning, everyone.
Speaker Change: And John I'm still trying to figure out is the first time it for a quarter is described as having personality.
Speaker Change: Im trying to understand what personality this quarter.
Speaker Change: But just can we talk a little bit about Mexico.
Speaker Change: And the quarter was I think was a little bit softer also I think you talked about market share gain our market share losses. So.
Speaker Change: Maybe can we talk a little bit about the current conditions. There I know last year. There was some some noise with the consumer around the election. So.
Speaker Change: What's happening with the consumer there and I guess, perhaps.
Speaker Change: What actions Youre going to take what you are planning to take going forward to.
Speaker Change: Restart volume growth.
Speaker Change: Yes sure.
Speaker Change: Firstly stephane stepping back a bit I mean, Latin America had a reasonable quarter. There was strong growth in Brazil, and particularly Argentina on the SSD side. It was a bit softer in Mexico. There are a few.
Speaker Change: New things that went into that softness in Mexico.
Speaker Change: Cycling a strong.
Speaker Change: First half of last year, and eastern being an important holiday in Mexico that shifted effectively from the first quarter to the end of April effectively the second quarter. So that's one that's the first place second pace.
Speaker Change: Macro uncertainty coming into the year post the election, the local Mexican electric and some geopolitical tension we called out some of the pullback in Hispanic consumers in the U S. As part of on July one of the factors in the U S. A volume that is also the same thing thats happening in Mexico.
Northern Mexico, some of the geopolitical tension and Hispanic pullback also affected the Mexico, particularly in the border region, which is very connected to the U S.
Speaker Change: So you've got that as well and so there was a couple of impacts of that company. We had some pretty good bright spots on coke zero at the VA and Santa Clara fuse.
Speaker Change: But we're very focused going into Q2.
Speaker Change: All in affordability with refillable and value.
Speaker Change: Reinforcing.
Speaker Change: As Joe in Mexico, which is a campaign about the local list.
Speaker Change: 100, tens of thousands of jobs in Mexico that about Mexico system and partnering closely with the fragmented.
Speaker Change: Try it so I think that it will come back as.
Speaker Change: As John said, each each quarter will have its own personality.
I'm not sure what Q2 will end up with the choppy it would be a good start.
Speaker Change: We're confident in our guidance because we are confident in our strategy and the systems execution is that all weather strategy.
Speaker Change: We will come back in Mexico.
Speaker Change: We'll pull it back.
Speaker Change: Our next question comes from Lauren Lieberman from Barclays. Please go ahead. Your line is open.
Lauren Lieberman: Great. Thanks, so much I wanted to talk a little bit more perhaps about the actions you're taking in the U S. You've called out consumer.
Lauren Lieberman: <unk> particular demographics, but there was also some pretty pointed.
Lauren Lieberman: Anti Coke brand Coke sentiment out there.
Lauren Lieberman: So I was just curious anything you could share articulate on what the system is doing to kind of manage through that.
Lauren Lieberman: So that's the key question. Thanks.
Lauren Lieberman: Yes sure.
Lauren Lieberman: Clearly with the key is.
Lauren Lieberman: <unk>.
Lauren Lieberman: Re prioritization refocusing hold some of the issues within the context of our strategy that has been working for us in the U S marketplace.
Lauren Lieberman: Very focused on driving the portfolio offering.
Lauren Lieberman: Operating the execution with our bottling partners and that's been a multi quarter multi year successful strategy. So within the context of continuing that we're going to make some adjustments what's happened in the first quarter, just standing back a second and say what happened.
Lauren Lieberman: A whole set of things came together.
Lauren Lieberman: There is a shift in Easter, which I mentioned, Mexico and the <unk>.
Lauren Lieberman: Weakness in some of the consumer.
Lauren Lieberman: Profit, particularly Hispanics and traffic and.
Lauren Lieberman: That was some very unfortunate video circulating round false completely falls, but they impact the business that kind of takes us.
Lauren Lieberman: Particularly coke original in the southern States that is a I think but there were other things like cold weather.
Lauren Lieberman: And some of the some of the calendar shift. So there was some known factors. There's some unfortunate factors unless some stuff that we got to focus on.
Lauren Lieberman: Can build on what went well Coke zero is still growing their life was still the number one brand wide retail dollars.
Lauren Lieberman: In the first quarter Topo Chico has gone well, so we have a lot to buildup.
Lauren Lieberman: We've focused on coming back on Coke original we're focusing in on winning back some of the Hispanic consumers.
Lauren Lieberman: Both the consumer and the channel point of view on reinforcing some of our affordability options. So I think we're going to again come back.
Lauren Lieberman: Might be choppy again going into Q2.
Lauren Lieberman: But we feel we have a handle on the controllable on Ken.
Lauren Lieberman: Get ourselves back on track to our winning strategy.
Lauren Lieberman: Our next question comes from Steve Powers from Deutsche Bank. Please go ahead. Your line is open.
Steve Powers: Okay, great. Thanks, Jay.
Lauren Lieberman: James.
Lauren Lieberman: Emphasize.
Lauren Lieberman: In the prepared remarks that the company's portfolio is made up.
Speaker Change: Our broad mix of both global and local brands given some of the shifts you've seen in demand since we were all together at Cagny in February could you talk maybe about how youre leaning more into some of those local brands in the current environment to the extent that you are.
Speaker Change: Or perhaps how you're executing or positioning differently. Some of your global brands global brands to emphasize their local relevance.
Speaker Change: Sure.
Speaker Change: Let me start by emphasizing the nature of the Coke system.
Speaker Change: Globally, obviously iconic <unk> known for telco color, though the world's most global brand on a set of all the.
Speaker Change: Global brands, but along with that kind of a headline global loss actually its a very profoundly local business. The beverages in each country are largely made in that country by local employees using local input. So the U S system for example between the people we employ directly.
Speaker Change: And the kind of the economic jobs that come through the supply chain is totally ecosystem like 860000 people of $58 billion you go to Brazil site 575000 people.
Speaker Change: $15 billion of GDP, so its a very profoundly local business as much as it looks like a global basis.
Speaker Change: So the paradox that gets managed productively from our point of view is how do we make global brands locally relevant so it's not that we in this current context switching.
Speaker Change: Supporting and investing.
Speaker Change: Behind our global brands into just local does know the trick.
Speaker Change: The imperative is to make the global brands locally relevant and in the moment solve geopolitical tension one of the key strategies is to drive our reinforced the made in all made by the fact that it's a local business the factories down the road from you your neighbors make the product.
Speaker Change: And this underlining all local lists of the production and the distribution and the workforce plus reinforcing affordability tends to be the key thing to do particularly with brand Coca Cola in these levels. So I would not expect to see any major shifts in the makeup.
Speaker Change: Within the brand from a global brand or brand portfolio as we go forward, it's about how you've engaged locally to reinforce the global nature of the brand, but the local physical presence of the brand and that's what works in these circumstances and it's a best practice that we know from around the world. It's not the first.
Speaker Change: It has to be used I'm sure it won't be the last and so we think app business model.
Speaker Change: Set up an environment that can take a degree of disturbance because it's a very resilient business model.
Speaker Change: Our next question comes from Felipe <unk> from Citi. Please go ahead. Your line is open.
Felipe: Hi, good morning, everyone.
Felipe: Wanted to ask a volume comment about the global trade dynamics, you mentioned that your operations are primary more call, but what are the portion of your business and the auction seeing the tariff simplification impact to your business any sense. If you can give us a sense of quantifying the potential impact I know all aluminum.
Felipe: As a component, but just any broader.
Felipe: Comment on the implication from the global trade environment, and then a follow up to that in the sense of the responses to.
Felipe: Just a general anti American brand sentiment around the world from the global trade disputes and then countries other than Mexico, which you called now where youre seeing a little bit more of.
Felipe: I guess the negative sentiment towards American brands. Thank you.
Yes, I'll take the second piece first because it's very much linked to the by previous answer which is reinforcing reinforce reinforcing local reinforcing local lists.
Felipe: And really making sure we're on affordability.
Felipe: I'm getting that really working.
Felipe: Focused on driving the execution of that strategy.
Felipe: Im not sure I would call out many other places obviously there have been countries that have cycled through this problem over the last number of years.
Felipe: Sure there'll be more I think the predominant issues have been as we've seen this quarter so far in the U S and in Mexico.
A little bit perhaps in Europe.
Felipe: Some of the other countries, but one has to pass the past sentiment from behavior.
Felipe: And therefore, it's very important that we were not responding to sentiment, we're responding to be heightened turning back to the tariff dynamic.
Felipe: We as we called out in our release, we see it as manageable, obviously, we're not immune to global trade dynamics.
Felipe: With.
Felipe: Talking now knowing what we know today and we're mindful of the environment can change around this again as I said before I think our local franchise structure is an advantage our exposure to <unk>.
Felipe: Import export is not massive in the major countries relative to our cost structure. So if we were to take.
Felipe: The U S. For example.
Felipe: We are exposed on a couple of inputs like orange juice or some of the dispensing equipment, we buy our bottling system is a bit exposed to some of the radisson and argument, but these are small pieces relative to the total size and even with your focus just in on those elements exclusively I think.
Felipe: About what impact they may have on our marketplace pricing you don't just have to take into account is higher if you got to take it out with what's happened to the price of the underlying commodity what's happened to the exchange rate from where you are buying it what's happened.
Felipe: So our hedging position because we have long term hedging positions.
Felipe: When you put all those things together are all of the other leavers across the cost elements of the business. That's how we and the bottling partners locally make the decisions on pricing so as it comes to the U S.
Felipe: Given all the things I talked about both way and the best where we operate directly and the bottle is locally.
Felipe: Sticking to our current pricing plans for the year, but knowing what we know today.
Speaker Change: Our next question comes from Chris Carey from Wells Fargo. Please go ahead. Your line is open.
Chris Carey: Hi, everybody.
Chris Carey: I wanted to ask a question about margins and specifically operating margins.
Chris Carey: I think.
Chris Carey: This is the best operating margin delivery.
Chris Carey: Going back on a model I suppose in the modern era I don't know if they were 100 years ago, but let's say these are very very strong operating margins.
Speaker Change: To what level are such margins sustainable.
Chris Carey: And do you envision any caveats in the quarter.
Chris Carey: Talking about marketing timing and then just.
Chris Carey: Connected to that.
Chris Carey: Do you think about reigniting trends in some of your developed markets North America Europe is there.
Chris Carey: A scenario whereby you would need to use some of this.
Chris Carey: Margin strength to drive that or is the price pack and our GM strategy strong enough that you can still offer affordability without sacrificing the margin strength. Thank you.
Chris Carey: Thanks, Chris.
Chris Carey: Yes, pleased with where we came out of the.
Chris Carey: The first quarter on the operating margin front, there is an element of timing in there that has.
Chris Carey: Benefited us.
Chris Carey: I would kind of step out of the quarter points to our longer term algorithm.
Chris Carey: The embedded embedded in that are our belief in our ability to expand margins over time.
Chris Carey: We have.
Chris Carey: As you know we have made a lot of progress over the last five or six years.
Chris Carey: To get to where we are north of <unk> 31.
Chris Carey: As we go into the rest of this year.
Chris Carey: And we expect to be able to do that with the with the levers we have in those levers are not just on the cost containment and management front as you mentioned in your second question. The they also flow through to being able to manage it quality top line overtime.
Chris Carey: And with regard to the investment thesis, we have to enable both the tough.
Chris Carey: And the margin line to expand in line with our algorithm.
Chris Carey: A combination of the buildup over the last few years of a substantial spend behind.
Chris Carey: Our portfolio.
Chris Carey: And the opportunity to leverage further productivity that we know we have over the next few years.
Chris Carey: We feel good about our ability to to lean into growth to invest behind the brands and to adapt as we need to this quarter is a good example of a quarter, where there's been a lot of adaptation requires to deliver the numbers. We have delivered for the for the here and now.
Chris Carey: But we're confident that we have sufficient.
Chris Carey: Sufficient.
Chris Carey: <unk> to be able to do with us.
Chris Carey: For the next number of quarters.
Chris Carey: And embedded in that an assumption that we will probably have to pivot again.
Chris Carey: In some parts of the world or other.
Speaker Change: Our next question comes from Rob <unk> from Evercore. Please go ahead. Your line is open.
Speaker Change: Great. Thank you very much you mentioned in the opening comments.
Speaker Change: That.
Speaker Change: Fair life growth may moderate and fair life and core power have been phenomenal success. So wondering if you can one talk about.
Speaker Change: The trajectory of that business, starting now with kind of the service levels you have.
Speaker Change: When the capacity.
Speaker Change: <unk> will come on a sense of how much capacity is coming on and where you see that brand going forward.
Speaker Change: In terms of how big it could get.
Speaker Change: And then also how youre going to protect that brand.
Speaker Change: From an intellectual property perspective, thank you.
Rob Evercore: Sure. Thanks, Rob.
Speaker Change: Firstly.
Speaker Change: When we talk about the kind of the growth moderating a fact of life.
Speaker Change: We're very much focusing on the percent.
Speaker Change: Growth and.
Speaker Change: And I think that Youre, starting to see the law of big numbers.
Speaker Change: To get to be a very big business is compounded.
Speaker Change: Very very high double digit percentage growth rates over the last number of years.
Speaker Change: Comment relative to percentages rather than total business size.
Speaker Change: If you look at as I commented earlier in the first quarter.
Speaker Change: This year Biolife again was the brand that added most retail dollars to the beverage industry.
Speaker Change: On top of doing so last year so.
The dollars the ROE.
Speaker Change: Bussiness in the size of the business continues to grow substantially.
Speaker Change: Our percentage compounding question is it moderates a little the capacity will come on towards the we've been increasing capacity in a number of different places.
Speaker Change: And some of the existing locations and the major capacity uplift will happen at the end of the year and it will be more than enough to see us through a good a good number of years and certainly we will make it unconstrained.
Speaker Change: To the extent, we get into that towards the end of the year.
Speaker Change: The long term opportunity I think is still.
Speaker Change: Very substantial.
Speaker Change: There is a lot I mean, it's it's got a lot of reasons behind the underlying growth.
Speaker Change: In terms of the quality of the product the quality of the taste the quality of the shelf life.
Speaker Change: The low lactose the higher product I mean, it's just a great product on many dimensions, which is part of what gives it a competitive advantage. It will just depend on any one pace, including including the IP on the technology that comes with it for the filtration.
Speaker Change: He is a very strong business obviously as.
Speaker Change: As we as we get into <unk>.
Speaker Change: Lots of extra headroom in terms of capacity, we can redouble down.
Speaker Change: On marketing innovation.
Speaker Change: And really continue to drive and expand that business. So we've kept in the swim lanes of coal products at the moment because thats. The most effective thing to do when youre running such growth rates and risk running out of capacity.
Speaker Change: We haven't because we're tending to grow in the first quarter.
Speaker Change: But we will get soon into unconstrained opportunity to continue to really.
Speaker Change: Drive this master brand forward.
Speaker Change: Our next question comes from Andrea <unk> from J P. Morgan. Please go ahead. Your line is open thank you.
Speaker Change: And good morning, everyone.
Speaker Change: I will start with James and then a clarification for John first James can you comment on Europe Middle East and Africa, you had the 3% growth in unit volume and Amazon of course, there is a lot of different dynamics given how large the region is but can you comment on the performance of Western Europe, which is I am sorry.
Speaker Change: A large component of your profit pool as you exited the quarter.
Speaker Change: As some CPG as you as you probably have been following have been calling a deceleration in the consumer dynamics, there as well and then a clarification for John on the underlying results I mean, it seems that the.
Speaker Change: FX came in or the outlook is 100 basis points better, but it seems that the underlying.
Speaker Change: <unk> does seem to be a 100 basis points worse to make for the all in comparable EPS to be the same. So can you comment on why it got sequentially worse or is that something you're embedding some of the risk of more punitive trading news or just conservatism.
Speaker Change: Despite the strong start of the year. Thank you.
Andreas: Yes, let me get the clarification out of the way Andreas Thanks for the question.
Speaker Change: It's early in the year.
Andreas: Currency is a function of.
Speaker Change: What we know today and.
Andreas: And our hedge positions.
Andreas: There's still a long way to go and so we.
We feel it is.
Andreas: Prudent at this juncture to guide as we have done so.
Andreas: We'll continue to update on the currency front as we go through the year.
Andreas: Yes.
Andreas: In the.
Andreas: EMEA segment, yes, the volume growth was principally driven by the Euro Asia markets.
Andreas: Actually including some of the North Africa alone, but it is a strong performance, particularly by the Eurasian market. The European business, specifically I was just calling out it is a good profit pool.
Andreas: The volume performance was actually in line with previous quarters that were mixed performances between.
Andreas: East West maybe the west a little softer again Europe has some of the factors that we talked about it in the case of the U S and Mexico, the shift of Easter and some of the macro uncertainties.
Andreas: On the political tensions, but again just want online like it was it was very similar to what they were tracking from last year in terms of volume performance and there was some really strong bright spots.
Andreas: In things like Coke zero Sprite zero fuze tea power is.
Andreas: And some really good marketing.
Andreas: <unk> not just cope with sort of everyday tasty celebrations and things that partnerships with Xbox and Panther and as.
Andreas: As we look forward, we're really going to continue to focus on some of the <unk> and affordability and the availability of cold drink equipment.
Andreas: <unk> into what is for Europe, the most important season, which is the.
The summer season.
Andreas: Thank you.
Andreas: Our next question comes from Bonnie Herzog from Goldman Sachs. Please go ahead. Your line is open.
Andreas: Alright, Thank you and good morning, everyone I am I just had a quick question on the away from home channel and consumer curious to hear how your away from home business trended in the quarter I guess versus.
Andreas: Even in Q4, and then what's your outlook for the channel this year, given the consumer I SMN.
Andreas: With that in mind, how should we think about the impact on your top line and margins if the away from home channels slow and I guess is that factored in your guidance.
Andreas: Okay.
Speaker Change: You're talking just U S or globally.
Speaker Change: Honestly globally, but if you wanted to give some color on the U S as well that would be helpful. Thank you.
Speaker Change: Yes sure.
Speaker Change: Let's start with the U S. I mean in the U S actually.
Speaker Change: Immediate consumption.
Speaker Change:
Speaker Change: Actually held up better.
Speaker Change: Future consumption some of the issues.
Speaker Change: Particularly some of the pullbacks from consumers was more concentrated.
Speaker Change: The take home channel. So if we were to look at the North American business IC business actually did reasonably well and the future consumption businesses, where the impact was most felt similarly.
Speaker Change: In Europe.
Speaker Change: The impact was more on the future consumption in the IC was actually growing.
Speaker Change: In Europe, I think that.
Speaker Change: Pulls out the importance of affordability in the retail channels and I think that's what it is kind of reflecting and that's notwithstanding some of the geopolitics, that's what it's reflecting and Thats what is calling for in the months going forward.
Speaker Change: And then if you kind of extract that to a global basis.
Speaker Change: Both at home and away from home, we're both growing globally speaking with away from home growing slightly faster than at home. So on a global basis looking good.
Speaker Change: Strong activations across a number of places, particularly Asia Pacific, where our away from home grew really strongly.
Speaker Change: And the bit there was a little bit more of a drag as the developed markets, particularly U S and Europe. It was in the future consumption, where those the bit of weakness, which as I said colesville working with the with the retail customers on some affordability to really drive our solutions that.
Speaker Change: Okay. Thank you.
Speaker Change: Our next question comes from <unk> <unk> from Jefferies. Please go ahead. Your line is open.
Speaker Change: Hey, everybody good morning.
Speaker Change: A question on currency may be slightly different.
Speaker Change: <unk> finished.
Speaker Change: Since John and James Your arrival, it's been about dollar based growth and worked very hard to be able to grow earnings in dollar terms.
Speaker Change: May be coming towards the end of a strong dollar super cycle and I'm curious to what degree are you contemplating that and does it change how.
Speaker Change: Sort of thinking about future investments capital returns things like that.
Speaker Change: He told us.
Speaker Change: Point taken.
Speaker Change: Yes.
Speaker Change: Not quite there yet.
Speaker Change: Come on.
Speaker Change: Celebrating.
Speaker Change: So the dollar but.
Speaker Change: Yes.
Speaker Change: We will continue to stay very focused on our core objective to.
Speaker Change: Grow U S dollar EPS.
Speaker Change: If there is a scenario overtime, whereby the dollar weakens to the extent that it impacts our total portfolio.
Speaker Change: Of currencies.
Speaker Change: We would expect to flow to flow that through.
Speaker Change: And.
Speaker Change: Where we are.
Speaker Change: We have but that scenario.
Speaker Change: Our pipeline, it's not the it's.
Speaker Change: That's not the foremost scenario, we have at the moment because I think the.
Speaker Change: Some of the headlines.
Speaker Change: Solar weakness are really linked to the U S dollar index.
Speaker Change: Which covers only six currencies.
Speaker Change: Most of the heavy weighting towards the Euro. So for example, four of our top site market currencies.
Speaker Change: Not covered in that index.
Speaker Change: The.
Speaker Change: The way we are looking us.
Speaker Change: Dollar at.
At the moment is in the context of our total currency basket.
Speaker Change: As reflected in our guidance.
Speaker Change: And.
Speaker Change: If there is a significant change of course on this front in the course of this year, we'll adjust accordingly.
Speaker Change: Our next question comes from Nik Modi from RBC capital markets. Please go ahead. Your line is open.
Nik Modi: Yes. Thank you good morning, everyone.
Nik Modi: James I, just wanted to get your thoughts on innovation and the wellness and functional space.
Nik Modi: There is a growing popularity of ingredients like offer bond Online's man and turmeric.
Nik Modi: Others in the U S. Many of these ingredients have some kind of finds backing on health and other functional benefits. So just wanted to get an understanding how youre thinking about using these products are ingredients in terms of innovation in the U S.
Nik Modi: Do you need clinical studies to support to support some of the health claims and a lot of these ingredients are used a lot over overseas and so given your global exposure.
Nik Modi: Just curious on how youre thinking about this in terms of the U S, especially as the population is aging.
Nik Modi: Sure.
Nik Modi: Clearly from a we're going to firstly, we're going to follow the consumer.
Nik Modi: And I think there are a couple of pieces to that one is what do they really want on how are they really behaving itself, where they want to spend their money.
Nik Modi: Second piece that goes with that is do they want.
Nik Modi: Combinations and all.
Nik Modi: Other words, whatever that whatever the ingredient on your list is do they want to take it through that beverage or do they wanted a different way and I'm going somewhere was that because at the end of the.
Nik Modi: They generally want that beverages to taste, good and adding certain ingredients affects the tight so tight. It is in my mind is still going to remain primary but to the extent there are consumers that are willing to try <unk> ingredients, absolutely will follow that trend.
Nik Modi: You can go back and look at history.
Nik Modi: We once did a product where we combined.
Nik Modi: A tablet people were taking to give themselves what effectively was a fake suntan intuit beverage and this was in France.
Many years ago, and I think it was with Sanofi. They came up with this idea of while people go to the pharmacy the by the Coke, while they by the drink and they buy the pills why don't put it altogether.
Nik Modi: And it's what people do in France.
Nik Modi: When they did it no one bought the drink they.
Nik Modi: They were not interested in combining the drink in the pill. They wanted to take the tailwind they wanted to take a pill and they wanted to have the dream when they wanted to drink and so the idea that everything is going to make are combining to one overall product I think is something yet to be tested clearly there are segments of consumers that are interested in.
Nik Modi: Certain ingredients and they will go.
Nik Modi: And they will try them and they'll be happy to have them in the beverage and I think you see a little progress all of that I think is more likely it'll be around macro.
Nik Modi: Kind of ingredients like protein rather than more.
Nik Modi: <unk> focused one.
Nik Modi: And the last thing is I don't think we are in the business of running clinical studies to the extent there are ingredients that we want to use or Shaw interestingly absolute product safety and quality.
Nik Modi: And then we may buy the ink from someone else to use.
Nik Modi: But we will continue to follow the consumer.
Our next question comes from Peter Grom from UBS. Please go ahead. Your line is open.
Peter Grom: Thank you operator, and good morning, everyone I wanted to ask a follow up on the <unk> commentary. It was flagged back in February and I know the world is.
Peter Grom: Clearly quite different today versus when you provided that outlook, but have your expectations for the second quarter shifted James you mentioned the word choppy a couple of times. So I just wasn't sure if that comment was based on some of the performance you've seen thus far in April or kind of what youre expecting looking ahead or whether it's simply just kind of a reminder, on the comparison. Thanks.
James Quincey: Yes, so I think firstly, it's a reminder, on the comparisons that it was the strongest quarter last year. So clearly it's going to be more complicated.
Speaker Change: Just on a cycle basis the cycle, although we still want to do well in Q2 and as John said earlier, it's one of the four quarters that goes to make up our full year guidance. So it's clearly got to play its role and habits personality, so to speak in delivering the full year.
Speaker Change: The thing that I would add relative to our previous comment Joe in Q2 is clearly there's.
Speaker Change: As referenced as my choppy comment there's clearly some.
Speaker Change: Short term disruption in supply chains.
Speaker Change: <unk> in the U S.
Speaker Change: I think the simplest way of bringing that to life is looking at.
Speaker Change: Container shipping.
Speaker Change: Bookings for late May early June again back to my earlier comment, it's not because it drives and impacts our business, but we are not expecting to see supply chain disruptions for our business in Q2 in the U S. But I think theres going to be some disruption around another a number of categories and industries around us.
Speaker Change: Which will have some effect with the consumers you can see the consumer sentiment has been impacted consumer spending still seems robust. So I would just highlight there is.
Chris Carey: Kris number.
Chris Carey: No not unknowns, if you like going into Q2, which is likely to produce a broader range of choppiness that we're going to have to respond to.
Chris Carey: And that's I think the texture I would add onto the previous comments, but again, let me underline.
Chris Carey: Both said earlier, which is we believe it's manageable given our business system, our strategy and our ability to adapt as we go through the quarter and the year.
Chris Carey: Our next question comes from Charlie Higgs from Redburn. Please go ahead. Your line is open.
Charlie Higgs: Yeah, Hi, James Jones.
Speaker Change: A good question on Asia Pacific volumes I'm, just wondering if you could unpack the plus 6% a bit more but perhaps with a focus on China and how youre feeling about the consumer environment.
Speaker Change: I know a lot of other consumer staples companies expected of a deflationary environment. So how do you feel about the consumer but youll see youll not rationalized.
Speaker Change: Further in China, and the execution by the local book list.
Speaker Change: Keith.
Keith: Yeah sure. Thanks, Charlotte look we had good momentum in Asia Pacific This quarter with the 6% volume growth.
Speaker Change: That was very.
Speaker Change: Strongly driven by good quarter.
Speaker Change: In India in particular.
Speaker Change: So with China growing as you called out I think the China growth is a function of a number of the actions we were taking last year's a focus the portfolio and restate. Some of the brands. We are doing better good lunar new year surprised a little more of a work in progress so good recovery there.
Speaker Change: It's still early to call.
Speaker Change: But with continued focus on the soft drink portfolio in China and liquid growth right. There as I said, India really good start the year.
Speaker Change: As we brought to activated a number of a number of things in the marketplace, there and grew customers and cold drink equipment.
Speaker Change: Long term thesis remains intact, obviously, it's not necessarily always going to be a straight line.
Speaker Change: Hi.
Speaker Change: <unk> results in Japan.
Speaker Change: South Korea, Japan, continuing to grow some softness.
Speaker Change: But we're focused on on working through that so hopefully that unpacks it a little bit for you.
Speaker Change: Yes.
Speaker Change: Great. Thank you.
Speaker Change: Our next question comes from Kevin Grundy from BNP Paribas. Please go ahead. Your line is open.
Speaker Change: Great. Thanks, Good morning, everyone and thanks for the question.
Speaker Change: I wanted to follow up on Chris's margin question.
Speaker Change: From earlier, but more from a North America perspective, and within the context of kind of striking the right balance with volume growth.
Speaker Change: North American margins, clearly very strong 30% historically, that's quite good price mix has been up materially the past four years that was the case again in <unk> you had volumes had been flattish the past couple of years and took a step back in the first quarter for the reasons that we talked about so James could you comment on striking the right balance in north.
Speaker Change: America between delivery and perhaps higher.
Speaker Change: Higher levels of volume growth and how that may differ in terms of how the company is going to go back that tactically in the near term given the uneven macro and then more in the intermediate term at a more normalized environment. So thanks for that.
Speaker Change: Let me take this one.
Speaker Change: So in North America, if I step out of the quarter for a moment first we have been on a journey for the last.
Speaker Change: Three to four years now of.
Speaker Change: Consistently improving the overall margin profile of our business in North America.
Speaker Change: And that has been driven by.
Speaker Change: A stronger core business.
Speaker Change: Much better.
Speaker Change: Revenue growth management approach in that core business.
Speaker Change: And then we've had the addition of a fair life into the portfolio that has helped us.
Speaker Change: So I think you should think about North America in that context is that we are we continue to see opportunity to.
Speaker Change: To improve that margin profile to be more in line with what we have in other parts of the world developed world, particularly.
Speaker Change: And so there is there is there is a keen focus on leaning into the growth opportunity to investing behind us.
Speaker Change: We also have had for some time now.
Speaker Change: As a core enterprise priority for North America to play a more important on a bigger role in our overall quest to one of the earlier questions to get our overall operating margin back to levels, which we are.
Speaker Change: We're excited to say in the in the car Ts.
Speaker Change: Okay.
Speaker Change: Our next question comes from Michael elaborate from Piper Sandler. Please go ahead. Your line is open.
Michael: Thank you good morning.
Speaker Change: Also just looking at margins in.
Speaker Change: Keeping in mind last quarter, you touched on some SG&A leverage calling out some.
Speaker Change: Marketing productivity one of the examples you gave was using some generative AI in.
Speaker Change: Working media.
Speaker Change: The non working the development of ads, which conceptually is straightforward enough.
Speaker Change: I guess in terms of just the total spend.
Speaker Change: Outcomes do you focus on to know where the right level is to make sure that the productivity is just efficiency and not reducing any effectiveness and how do you look how do you see that playing out as youre, making a push to get more efficient this year.
Speaker Change: Yeah.
Speaker Change: So maybe maybe I can say, yes, I think yes.
Speaker Change: We're very very focused on.
Speaker Change: The activities that are needed to support the portfolio.
Speaker Change: And and then working backwards from there what is the most efficient way to execute those activities.
Speaker Change: Looking at it the other way around.
Speaker Change: And trying to drive efficiency through cutbacks are through.
Speaker Change: Taken sort of a blunt blunt weapon at them. So so.
Speaker Change: The approach has changed pretty significantly over the last few years to be as I say activity driven.
Speaker Change: We have a.
Speaker Change: Pretty clear understanding as to where the opportunities exist.
Speaker Change: To drive more efficiency. So for example, the relationship between the.
Speaker Change: The amount we spend on creative work versus 10 months that we spend on.
Speaker Change: Brian.
Speaker Change: Engaging with those creators.
Speaker Change: Is something that is a high priority and we have.
Speaker Change: Work underway to get that to optimal levels and we're confident we can do so.
Speaker Change: The use of new technology to be able to do activities, which in the analog world were more expensive and took a longer time to happen is is something that we're embedding more and more into the marketing equation.
Speaker Change: The way in which we are planning our <unk>.
Speaker Change: Media using a much more sophisticated.
Speaker Change: Datasets et cetera, et cetera is another opportunity to.
Chris.
Speaker Change: The same if not higher impact more efficiently. So I just I think the name of the game is for.
Speaker Change: <unk> focus on the activities and then challenge ourselves as to how those activities can be delivered.
Speaker Change: Either faster cheaper.
Speaker Change: Both.
Speaker Change: Okay. That's great. Thank you.
Speaker Change: Our next question comes from Bill Chappell from <unk> Securities. Please go ahead. Your line is open.
Bill Chappell: Thanks, Good morning.
Bill Chappell: Just kind of a quick question could you remind us kind of what your business looks like in the UK.
Bill Chappell: Ukraine, and Russia, four or five years ago, what it looks like today.
Bill Chappell: If there was piece there what it looks like down the road.
Bill Chappell: Sure.
Bill Chappell: When four or five years ago, when we when we.
Bill Chappell: Pulled out our brands.
Bill Chappell: I think we called out it was about a 1% to 2% of revenue in the similar ish kind of amount of profits.
Bill Chappell: So thats kind of what we left on the table when we pulled out.
Bill Chappell: That was a few years ago.
Bill Chappell: <unk> is a much smaller business obviously.
Bill Chappell: <unk> been impacted by the war.
Bill Chappell: But it's.
Bill Chappell: It was a good business, we like the market, but it's not so big.
Bill Chappell: I think.
Bill Chappell: Thoughts on the future at this stage premature.
Bill Chappell: There's a long way to go to get to me to be.
Bill Chappell: And I think a lot of water has to pass under the bridge.
Speaker Change: Our last question today will come from Robert Moskow from TD Cowen. Please go ahead. Your line is open.
Robert Moskow: Hi, Thank you.
Speaker Change: James and John could you be a little more specific as to where you think you are on clearing up the misconceptions about trademark coke.
Speaker Change: Kind of impacted first quarter, and then and then secondly, maybe a little more detail on the state of the Hispanic consumer.
Speaker Change: <unk> uniquely.
Speaker Change: Capable of evaluating.
Speaker Change: How those consumers are thinking how they are spending in home away from home.
Speaker Change: Can you touch on those two things.
Speaker Change: Yeah look I think as it relates very specifically firstly to the faults.
Speaker Change: Video I think with us largely in the rearview mirror.
Speaker Change: <unk> of it is affecting our business.
Speaker Change: It wasn't the first piece of misinformation disinformation.
Speaker Change: Or anything else nefarious about the Coca Cola brand and I'm sure it won't be the last.
Speaker Change: But we are very focused on recovering from me as I called out some of the actions.
Speaker Change: Particularly around local nurse Ari can of local economic impact.
Speaker Change: Connectivity to the values and events that those consumers care about but also driving affordability with tailored promotions and value channels.
Speaker Change: The overall state of these bundled consumer I think partly that was maybe ever so let's just leave that aside for now.
Speaker Change: I think there was a little bit of pullback input to sing.
Speaker Change: And in in traffic not just on the U S side of the border remember.
Speaker Change: A significant portion of the industrial footprint in Northern Mexico, which provides exports I mean, the highly integrated nature of the supply chain between northern Mexico.
Speaker Change: In the U S and I think some of the geopolitical tension, which just causing people to be a little more cautious with their spend a little less going out a little more keeping the money in the pocket.
Speaker Change: And I think that will.
Speaker Change: That's the kind of the shock of the event happening in that it tends to abate.
Speaker Change: Which is kind of the comment on the U S consumer the difference between the difference between sentiment and actual spend.
Speaker Change: Obviously that is.
Speaker Change: Previously the outsize could be choppy in the near term as a resolution of coast, but that's kind of the general sites I think from our point of view.
Speaker Change: A lot of focus on our game plan, which is sticking to our all weather strategy focusing on the brands the execution. The local connectivity reinforcing the you know the made in the U S for the U S business on the export ex Joy in Mexico for the Mexican business.
Speaker Change: And I think that will see us through as we go through the balance of the year.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thanks, very much everyone.
Speaker Change: So to summarize innate.
Speaker Change: Enabled by our or where the strategy with focus on prioritizing agility remaining consumer centric partnering closely across our ecosystem for the rest of the year.
Speaker Change: There'll be many types of environments, and we're going to leverage our capabilities to drive the growth and the enduring value. Thank you for your interest your investment in the company.
Speaker Change: Joining us this morning, thank you.
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.
Speaker Change: Yes.