Mondelez International Q4 2025 Mondelez International Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Mondelez International Inc Earnings Call
Speaker #1: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero. Any member of our team will be happy to help you.
Operator: Good afternoon, and welcome to the Mondelez International 2025 Q4 and full year earnings question and answer session. Your lines have been placed on listen-only until it's your turn to ask a question. In order to ask a question, please press the star key followed by the number 1 on your touchtone phone at any time. To remove yourself from the queue, press star 2. On today's call are Dirk Van de Put, Chairman and CEO, Luca Zaramella, COO and CFO, and Shep Dunlap, SVP of Investor Relations. Earlier this afternoon, the company posted a press release and prepared remarks, both of which are available on its website. During this call, the company will make forward-looking statements about performance. These statements are based on how the company sees things today.
Speaker #2: Please stand by. Your meeting is about to begin. Good afternoon and welcome to the Mondelez full year earnings question and answer International 2025 fourth quarter and lines have been placed on listen only session.
Shep Dunlap: Please stand by. Your meeting is about to begin. Good afternoon, and welcome to the Mondelez International 2025 Q4 and full year earnings question and answer session. Your lines have been placed on listen-only until it's your turn to ask a question. In order to ask a question, please press the star key followed by the number 1 on your touchtone phone at any time. To remove yourself from the queue, press star 2. On today's call are Dirk Van de Put, Chairman and CEO, Luca Zaramella, COO and CFO, and Shep Dunlap, SVP of Investor Relations. Earlier this afternoon, the company posted a press release and prepared remarks, both of which are available on its website. During this call, the company will make forward-looking statements about performance. These statements are based on how the company sees things today.
Speaker #2: Until it's your turn to ask a question, in order to ask your question, please press the star key, followed by the number one on your touch-tone phone at any time.
Speaker #2: To remove yourself from the queue, press star two. On today's call are Dirk Vandeput, Chairman and CEO; Luca Zaramella, COO; and CFO; and Shep Dunlap, SVP of Investor Relations.
Speaker #2: Earlier this afternoon, the company posted a press release and prepared remarks, both of which are available on its website. During this call, the company will make forward-looking statements about how the company sees things today.
Speaker #2: Actual results may differ materially, due to risks and performance. uncertainties. Please refer to the These statements are based on factors contained in the company's 10-K, 10-Q, and 8-K filings for more details on forward-looking discusses results today, unless statements.
Shep Dunlap: Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in the company's 10-K, 10-Q, and 8-K filings for more details on forward-looking statements. As the company discusses results today, unless noted as reported, it will be referencing non-GAAP financial measures, which adjust for certain items included in the company's GAAP results. In addition, the company provides year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within the company's earnings release and at the back of the slide presentation. We will now move to our first question. Our first question comes from the line of Andrew Lazar with Barclays. Please go ahead.
Operator: Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in the company's 10-K, 10-Q, and 8-K filings for more details on forward-looking statements. As the company discusses results today, unless noted as reported, it will be referencing non-GAAP financial measures, which adjust for certain items included in the company's GAAP results. In addition, the company provides year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within the company's earnings release and at the back of the slide presentation. We will now move to our first question. Our first question comes from the line of Andrew Lazar with Barclays. Please go ahead.
Speaker #2: As noted, as reported, the company will be referencing non-GAAP financial measures, which adjust for certain items included in the company's results. In addition, the company provides year-over-year growth on a constant currency basis, unless otherwise noted.
Speaker #2: You can find the comparable GAAP measures GAAP and GAAP to non-GAAP reconciliations within the company's earnings release and at the back of the slide presentation.
Speaker #2: We will now move to our first question. Our first question comes from the line of Andrew Lazar with Barclays. Please go
Speaker #2: ahead. Great.
Andrew Lazar: Great. Thanks very much. Good afternoon, everybody.
Andrew Lazar: Great. Thanks very much. Good afternoon, everybody.
Speaker #3: Thanks very much. Good afternoon,
Dirk Van de Put: Hi, Andrew.
Dirk Van de Put: Hi, Andrew.
Speaker #4: Hi,
Speaker #4: Andrew. Hi there. Dirk,
Andrew Lazar: Hey there. Dirk, maybe to start us off, clearly, significant interest in obviously the chocolate category and, you know, how the precipitous fall in cocoa could impact the dynamic. Where is Mondelēz currently on its chocolate strategy? How does it play out from here, particularly as it relates to, you know, the potential for some price deflation in areas where obviously significant pricing has been taken?
Andrew Lazar: Hey there. Dirk, maybe to start us off, clearly, significant interest in obviously the chocolate category and, you know, how the precipitous fall in cocoa could impact the dynamic. Where is Mondelēz currently on its chocolate strategy? How does it play out from here, particularly as it relates to, you know, the potential for some price deflation in areas where obviously significant pricing has been taken?
Speaker #3: Hi.
Speaker #4: maybe to start us off, clearly, significant interest in, obviously, the chocolate category and how the precipitous fall its chocolate strategy? dynamic. Where's Mondelez currently on from here?
Speaker #4: How does it play out Particularly, as it relates to the potential for some price deflation in areas where obviously significant pricing has been taken.
Speaker #4: Yep. Thank you, Andrew. I would start off by saying that if you look at 2025 and in the world, seeing the rather important price increases that took place, that the category overall has shown a lot of resilience.
Dirk Van de Put: Yep. Thank you, Andrew. I would start off by saying that if you look at 2025 and the overall chocolate market in the world, seeing the rather important price increases that took place, that the category overall has shown a lot of resilience despite all the volatility. In that, we had a playbook for our chocolate strategy, which was largely to price, list price, or do revenue growth management, largely through price pack architecture. And we've executed well against that chocolate playbook in 2025. If you then look at the markets around the world, I think places like India, Brazil, Australia, and South Africa, some of our bigger chocolate markets, we have done quite well. And also in Europe, in about half of the markets, things played out exactly as expected.
Dirk Van de Put: Yep. Thank you, Andrew. I would start off by saying that if you look at 2025 and the overall chocolate market in the world, seeing the rather important price increases that took place, that the category overall has shown a lot of resilience despite all the volatility. In that, we had a playbook for our chocolate strategy, which was largely to price, list price, or do revenue growth management, largely through price pack architecture. And we've executed well against that chocolate playbook in 2025. If you then look at the markets around the world, I think places like India, Brazil, Australia, and South Africa, some of our bigger chocolate markets, we have done quite well. And also in Europe, in about half of the markets, things played out exactly as expected.
Speaker #4: Despite all the volatility in that, we had a playbook for our chocolate strategy, which was largely to price—list revenue growth management, largely price—or do through price pack architecture.
Speaker #4: And we've executed well against that chocolate '25. If you then look at playbook in the markets around the world, I think places like India, Brazil, Australia, South Africa, some of our bigger chocolate well.
Speaker #4: In markets, we have done quite well in about half of them. And also in Europe, markets played out exactly as expected. However, I would say in the more northern markets in Europe—Germany, the Nordics, the UK—we saw a higher than expected elasticity.
Dirk Van de Put: However, I would say in the more northern markets in Europe, Germany, the Nordics, the UK, we saw a higher than expected elasticity, and so we have to take adjustments in 2026. We have learned that certain price points are very important, and so we have adjusted already to put our product at the right price point. Some of the PPA worked, others didn't, so we are adjusting also some of the PPA we have in the market. We are planning to increase our investments behind our brands because in this year our cocoa coverage is at a better cost than it was in 2025, so we are able to increase substantially investment behind our brands. And we do that because we wanna get back to the normal frequency and quantity of consumption that we've seen.
Dirk Van de Put: However, I would say in the more northern markets in Europe, Germany, the Nordics, the UK, we saw a higher than expected elasticity, and so we have to take adjustments in 2026. We have learned that certain price points are very important, and so we have adjusted already to put our product at the right price point. Some of the PPA worked, others didn't, so we are adjusting also some of the PPA we have in the market. We are planning to increase our investments behind our brands because in this year our cocoa coverage is at a better cost than it was in 2025, so we are able to increase substantially investment behind our brands. And we do that because we wanna get back to the normal frequency and quantity of consumption that we've seen.
Speaker #4: And so we have to take adjustments in '26. We have learned that certain price points are very important, and so we have adjusted already to put our products at the right price point.
Speaker #4: Some of the PPA worked, others didn't. So we are adjusting also some of the PPA we have in the market. We are planning to increase our investment behind our brands because in this year, our cocoa coverage is at a better cost than it was in '25.
Speaker #4: So we are able to increase substantially investment behind our brands. And we do that because we want to get back to the normal frequency and quantity of consumption that we've seen.
Speaker #4: Penetration hasn't gone down, but the frequency and the quantity of consumption did. We are also investing in price, as I mentioned, to hit those right price points.
Dirk Van de Put: Penetration hasn't gone down, but the frequency and the quantity of consumption did. We are also investing in price, as I mentioned, to hit those right price points and as well in new PPA. We're gonna push hard on innovation. We have a collaboration with Biscoff, which was very successful in 2025, but it really is gonna go to the next level in 2026. So I think we've got a very strong innovation agenda led by Biscoff, with a number of other things in Europe. And then we are gonna have some important activations in store.
Dirk Van de Put: Penetration hasn't gone down, but the frequency and the quantity of consumption did. We are also investing in price, as I mentioned, to hit those right price points and as well in new PPA. We're gonna push hard on innovation. We have a collaboration with Biscoff, which was very successful in 2025, but it really is gonna go to the next level in 2026. So I think we've got a very strong innovation agenda led by Biscoff, with a number of other things in Europe. And then we are gonna have some important activations in store.
Speaker #4: And as well in new PPA. We're going to push hard on innovation. We have the collaboration with Biscoff, which was very successful in '25, but it really is going to go to the next level in '26.
Speaker #4: So I think we've got a very strong innovation agenda, led by Biscoff, with a number of other things in Europe. And then we are going to have some important activations in stores.
Speaker #4: However, as you probably have seen in the last two weeks, suddenly the cocoa price has declined more than anybody would have expected. And this will have some short-term pressures largely as it relates to probably have an industry or the larger players industry that have already are covered for '26 at a higher price than the current market price.
Dirk Van de Put: However, as you probably have seen in the last two weeks, suddenly the cocoa price has declined more than anybody would have expected, and this will have some short-term pressures, largely as it relates to probably have an industry or the larger players industry that have already are covered for 2026 at a higher price than the current market price. And this could maybe give us some unexpected competitive reactions. And so we wanna build in some flexibility in our guidance because we don't quite know how that is going to play out in the market in 2026. What is good in all of this is that cocoa now has returned to a level that is much more in line with the historic price that we've seen, and that bodes very well for 2027.
Dirk Van de Put: However, as you probably have seen in the last two weeks, suddenly the cocoa price has declined more than anybody would have expected, and this will have some short-term pressures, largely as it relates to probably have an industry or the larger players industry that have already are covered for 2026 at a higher price than the current market price. And this could maybe give us some unexpected competitive reactions. And so we wanna build in some flexibility in our guidance because we don't quite know how that is going to play out in the market in 2026. What is good in all of this is that cocoa now has returned to a level that is much more in line with the historic price that we've seen, and that bodes very well for 2027.
Speaker #4: And this could maybe give us some unexpected competitive reactions. And so we want to build in some flexibility in our guidance because we don't quite know how that is going to play out in the market in '26.
Speaker #4: What is good in all of this is that cocoa now has returned to a level that is much more in line with the historic price that we've seen.
Speaker #4: And that bodes very well for '27. As I said, we're already covered for '26. There's not a lot we can do anymore. But '27 certainly will benefit from this.
Dirk Van de Put: As I said, we're already covered for 26. There's not a lot we can do anymore, but 27 certainly will benefit from this. So we see our chocolate business in 27 increase its margin in a considerable way. As it relates to 26, like I said, we're gonna remain very agile. We're gonna do all the things that we said, and then make sure we enter 27 with a lot of strength. We are planning to go through a lot more detail on what our chocolate strategy is during the CAGNY Conference, so I would certainly invite everybody to come and listen to us there.
Dirk Van de Put: As I said, we're already covered for 26. There's not a lot we can do anymore, but 27 certainly will benefit from this. So we see our chocolate business in 27 increase its margin in a considerable way. As it relates to 26, like I said, we're gonna remain very agile. We're gonna do all the things that we said, and then make sure we enter 27 with a lot of strength. We are planning to go through a lot more detail on what our chocolate strategy is during the CAGNY Conference, so I would certainly invite everybody to come and listen to us there.
Speaker #4: So, we see our chocolate business in '27 increase its margin in a considerable way. As it relates to '26, like I said, we're going to remain very agile.
Speaker #4: We're going to do all the things that we said. And then make sure we enter '27 with a lot of strength. We are planning what our chocolate strategy is during to go through a lot more detail on the CAGNI conference.
Speaker #4: So, I would certainly invite everybody to come and listen to us.
Speaker #4: there. Great.
Andrew Lazar: ... Great, really helpful. Hopefully, you can arrange to get some of the Biscoff stuff down there as well. That's just a personal favorite. And then, and then, Luca, maybe, shifting gears over to the outlook, maybe what's your thought process on, on the guidance range and, and sort of investment flexibility that Dirk mentioned in light of the fall in cocoa costs, and, and what are your updated thoughts on sort of the, the cocoa environment, if you will, from here? Thanks so much.
Andrew Lazar: ... Great, really helpful. Hopefully, you can arrange to get some of the Biscoff stuff down there as well. That's just a personal favorite. And then, and then, Luca, maybe, shifting gears over to the outlook, maybe what's your thought process on, on the guidance range and, and sort of investment flexibility that Dirk mentioned in light of the fall in cocoa costs, and, and what are your updated thoughts on sort of the, the cocoa environment, if you will, from here? Thanks so much.
Speaker #3: Really helpful. Hopefully, you can arrange to get some of the Biscoff stuff down there as well. That's just a personal favorite. And then Luca, maybe shifting gears over to the outlook.
Speaker #3: Maybe what's your thought process on the guidance range and sort of investment flexibility that Dirk mentioned in light of the fall in cocoa costs?
Speaker #3: And what are your updated thoughts on, sort of, the cocoa environment, if you will, from here? Thanks so much.
Speaker #3: much.
Speaker #2: Yeah. Thank you,
Luca Zaramella: Yeah. Thank you, Andrew. So before commenting on the 2026 guidance, maybe a brief comment about how we ended the year. And I think, as we said, we are quite happy with our emerging markets momentum, and quite frankly, also happy because we saw sequential improvements in developed markets, albeit we are not fully there yet. On 2026, the guiding principle of the guidance was to be prudent, particularly as we see some short-term pressure points, like in the US. You know, that the biscuits category is still subdued, and you know, the plan is that it will continue like that for the first half, at least, with some marginal improvements in the second half.
Luca Zaramella: Yeah. Thank you, Andrew. So before commenting on the 2026 guidance, maybe a brief comment about how we ended the year. And I think, as we said, we are quite happy with our emerging markets momentum, and quite frankly, also happy because we saw sequential improvements in developed markets, albeit we are not fully there yet. On 2026, the guiding principle of the guidance was to be prudent, particularly as we see some short-term pressure points, like in the US. You know, that the biscuits category is still subdued, and you know, the plan is that it will continue like that for the first half, at least, with some marginal improvements in the second half.
Speaker #2: Andrew. So before commenting on the '26 guidance, maybe a quick comment about how we ended the year. And I think as we said, we are quite happy with our emerging markets' momentum.
Speaker #2: And quite frankly, also happy because we saw sequential improvements in developed markets, albeit we are not fully there yet. On '26, the guiding principle of the guidance was to be prudent, particularly as we see some short-term pressure points like in the US.
Speaker #2: You know that the biscuits category is still subdued. And the plan is that it will continue like that for the first half at least, with some marginal improvements in the second half.
Luca Zaramella: In Europe, we have planned for a chocolate category that is stable after the meaningful prices that were taken, but we also plan for some disruption due to the usual customer negotiation process that takes place in the first part of the year. The main reason for the guidance range is that recent and sudden cocoa dynamics might require some adjustments and flexibility, depending on how competitors will react to those prices and where cocoa eventually will stabilize. As we said, our pipeline cost for 2026 is determined at this point in time, and it is clearly higher than current cocoa spot. So this is something that we hadn't anticipated before, and as we said, it just happened in the last couple of weeks. Our objectives are clear.
Luca Zaramella: In Europe, we have planned for a chocolate category that is stable after the meaningful prices that were taken, but we also plan for some disruption due to the usual customer negotiation process that takes place in the first part of the year. The main reason for the guidance range is that recent and sudden cocoa dynamics might require some adjustments and flexibility, depending on how competitors will react to those prices and where cocoa eventually will stabilize. As we said, our pipeline cost for 2026 is determined at this point in time, and it is clearly higher than current cocoa spot. So this is something that we hadn't anticipated before, and as we said, it just happened in the last couple of weeks. Our objectives are clear.
Speaker #2: Europe, we have planned for a chocolate category In that is stable after the meaningful prices that were taken. But we also planned for some disruption due to the usual customer negotiation process that takes place in the first part of the year.
Speaker #2: The main reason for the guidance range is that recent and sudden cocoa dynamics might require some adjustments and flexibility. Depending on how competitions will react to those prices and where cocoa eventually will stabilize.
Speaker #2: our pipeline costs for As we said, '26 is determined. That is point
Speaker #1: and it is Time clearly at a than higher current spot . So this is that hadn't something anticipated . we Something that we hadn't anticipated And as before .
Speaker #1: We said it just happened in the last couple of weeks. Our objectives are clear. We want to win with the consumers.
Luca Zaramella: We want to win with the consumers, we want to win in the marketplace, and that's one of the reasons why we are investing substantially behind our brands. And hopefully, the goal is to have improved volume trajectory, particularly as we move through the year. On the phasing, maybe just one word. I commented already on the customer disruption in Europe in the first part of the year, but on profit, given the way our inventory accounting works, we will face some headwinds, and we mentioned that in the prepared remarks. On cocoa, I said it a few times, and I believe fundamentally nothing has changed. If you look at supply and demand, the dynamics were clear well before the last couple of weeks, and so I believe what the market is recognizing now is maybe a little bit overdue.
Luca Zaramella: We want to win with the consumers, we want to win in the marketplace, and that's one of the reasons why we are investing substantially behind our brands. And hopefully, the goal is to have improved volume trajectory, particularly as we move through the year. On the phasing, maybe just one word. I commented already on the customer disruption in Europe in the first part of the year, but on profit, given the way our inventory accounting works, we will face some headwinds, and we mentioned that in the prepared remarks. On cocoa, I said it a few times, and I believe fundamentally nothing has changed. If you look at supply and demand, the dynamics were clear well before the last couple of weeks, and so I believe what the market is recognizing now is maybe a little bit overdue.
Speaker #1: We want to win in the marketplace. And that is one of the reasons why we are investing substantially behind our brands, and hopefully the goal is to improve volume trajectory. As we have moved through the year on phasing, then just maybe one word.
Speaker #1: I already commented the on customer disruption in Europe . In the first part of the on profit year , but . the Given inventory way works , we will we headwinds .
Speaker #1: face some And mentioned that in the prepared remarks on Coco . I said it a few , and times I believe fundamentally has If you changed .
Speaker #1: Nothing on supply and look at demand, the dynamics were clear well before the last couple of weeks. And I believe what the market is recognizing now is maybe a little bit overdue.
Luca Zaramella: Obviously, we would have liked a little bit more of a balanced approach to the way down of cocoa. It happened all of a sudden. But reality is that in our minds, cocoa, as it stands now, is a fairer representation of supply and demand. And that's why we believe this level is important for us to realize as we look at profitability, particularly going forward into 2027 and beyond.
Luca Zaramella: Obviously, we would have liked a little bit more of a balanced approach to the way down of cocoa. It happened all of a sudden. But reality is that in our minds, cocoa, as it stands now, is a fairer representation of supply and demand. And that's why we believe this level is important for us to realize as we look at profitability, particularly going forward into 2027 and beyond.
Speaker #1: Obviously , we would have liked a little bit more a balance . of Approach to to the way down of Coco . It of a of .
Speaker #1: Variability is happened all that our minds , Coco , as it stands now , is a fairer representation of supply and demand . And that's why we believe this level is for us to important realize as we look profitability , particularly going at forward into beyond .
Andrew Lazar: Great. Thanks so much.
Andrew Lazar: Great. Thanks so much.
Luca Zaramella: Thank you, Andrew.
Luca Zaramella: Thank you, Andrew.
Speaker #2: so 27 and much Great . Thanks
Speaker #1: Andrew Thank you , .
Shep Dunlap: Thank you. We'll now move on to Peter Galbo with Bank of America. Your line is now open.
Operator: Thank you. We'll now move on to Peter Galbo with Bank of America. Your line is now open.
Speaker #3: Thank . you move on to We'll now Galbo of with Bank Peter America . Your line is now open .
Peter Galbo: Hey, good afternoon, Dirk and Luca. Thanks, thanks for the questions. Luca, maybe if I can actually pick up on the comments you just made around some of the phasing more on the cost side. I know that you mentioned, I think the lion's share of it comes in the first quarter. So maybe you can just talk us through a bit more the cost phasing on cocoa through 2026, and then maybe how we would think about the phasing on potential price investments in chocolate over the balance of the year.
Peter Galbo: Hey, good afternoon, Dirk and Luca. Thanks, thanks for the questions. Luca, maybe if I can actually pick up on the comments you just made around some of the phasing more on the cost side. I know that you mentioned, I think the lion's share of it comes in the first quarter. So maybe you can just talk us through a bit more the cost phasing on cocoa through 2026, and then maybe how we would think about the phasing on potential price investments in chocolate over the balance of the year.
Speaker #4: Hey . Good afternoon And Luca . Dirk . Thanks for the questions , Luca . Maybe if I can actually pick up on the comments .
Speaker #4: You just made around some of the phasing . More on the cost side . I know that you you mentioned , I think the lion's share of it comes in in the first quarter , maybe you can just through talk us more .
Speaker #4: You just made around some of the phasing . More on the cost side . I know that you you mentioned , I think the lion's share of it comes in in the first quarter , maybe you can just through talk us but The cost phasing on Coco through 26 , and then would maybe how we think about the on potential price phasing investments in of the balance year chocolate over the .
Luca Zaramella: Thank you, Peter. So, fundamentally, maybe I'll start with the top line, because, I think that's a clear component of, how we think about, the plan in 2026. As you might imagine, at this level, we are not gonna price cocoa further necessarily. But it is also important to know that our profit took, quite a material hit in, in 2025, and so we were not certainly fully priced at the level of cocoa in, in 2025. Albeit cost is coming down in 2026, we need to keep a level of pricing that is pretty much the same as, as we had in, in 2025.
Luca Zaramella: Thank you, Peter. So, fundamentally, maybe I'll start with the top line, because, I think that's a clear component of, how we think about, the plan in 2026. As you might imagine, at this level, we are not gonna price cocoa further necessarily. But it is also important to know that our profit took, quite a material hit in, in 2025, and so we were not certainly fully priced at the level of cocoa in, in 2025. Albeit cost is coming down in 2026, we need to keep a level of pricing that is pretty much the same as, as we had in, in 2025.
Speaker #1: Thank you. So, Peter, fundamentally, maybe I'll start with the top line because I think that's a clear component of how we think and plan about the As in '26.
Speaker #1: you might imagine , at this level , we are going to price not further necessarily , is also important to know but it our that profit took quite a material hit in in 2025 .
Speaker #1: We were, and certainly fully priced at the level of cocoa in '25. And albeit, the pipeline cost is coming down in '26.
Speaker #1: We need to keep a level of that is pricing pretty much the same as we as in have In in 25 . of costs .
Luca Zaramella: In terms of costs, the way our inventory accounting works is that we will have to adjust the level of inventory in the first day of the year to the actual pipeline cost that we see in 2026, versus how we exited the year in 2025. And that is a one-time adjustment that takes place on the inventory, and that is causing, in the first two quarters, but predominantly in Q1, an impact that is at $1 billion. And that gives you an idea of the dislocation of costs that we see throughout the two years. So in terms of top line, I would say in chocolate specifically, flat pricing, in terms of volume, some implications as there is cocoa disruption, as there is customer disruption in Europe.
Luca Zaramella: In terms of costs, the way our inventory accounting works is that we will have to adjust the level of inventory in the first day of the year to the actual pipeline cost that we see in 2026, versus how we exited the year in 2025. And that is a one-time adjustment that takes place on the inventory, and that is causing, in the first two quarters, but predominantly in Q1, an impact that is at $1 billion. And that gives you an idea of the dislocation of costs that we see throughout the two years. So in terms of top line, I would say in chocolate specifically, flat pricing, in terms of volume, some implications as there is cocoa disruption, as there is customer disruption in Europe.
Speaker #1: The way our inventory accounting works is that we will have to adjust the level of inventory the in first day of the year to the actual pipeline cost that we see in in versus how we 2026 exited the year in And that is a one time adjustment 2025 .
Speaker #1: That takes on the place inventory and causing that is in the first two quarters, but predominantly in Q1 and impact. That is half a billion dollars.
Speaker #1: And that gives you an dislocation of that we costs see throughout the two . The two years . top So terms of in line , I say chocolate in specifically flat would pricing in terms of volume , some implications as the risk of disruption as there is customer in in disruption Europe and terms of higher cost , cost in , in the versus the second half .
Speaker #1: And that gives you an dislocation of that we costs see throughout the two . The two years . top So terms of in line , I say chocolate in specifically flat would pricing in terms of volume , some implications as the risk of disruption as there is customer in in disruption Europe and terms of higher cost , cost in , in the versus the first half And so as we move through the year , you're going I think see a sequential to volume revenue .
Speaker #1: And that gives you an dislocation of that we costs see throughout the two . The two years . top So terms of in line , I say chocolate in specifically flat would pricing in terms of volume , some implications as the risk of disruption as there is customer in in disruption Europe and terms of higher cost , cost in , in the versus the first half And so as we move through the year , you're going I think see a sequential to improvement of But most importantly in and in in terms of Ebit phasing of these in all investments in ANC is spaced equally throughout quarter .
Luca Zaramella: In terms of cost, higher cost in the first half versus the second half. So as we move through the year, I think you're gonna see a sequential improvement of volume and revenue, but most importantly, in terms of EBIT phasing. In all of these, investments in ANC is equally spaced throughout the quarter, so no material changes, I would say, quarter on quarter in absolute terms of our ANC investment.
Luca Zaramella: In terms of cost, higher cost in the first half versus the second half. So as we move through the year, I think you're gonna see a sequential improvement of volume and revenue, but most importantly, in terms of EBIT phasing. In all of these, investments in ANC is equally spaced throughout the quarter, so no material changes, I would say, quarter on quarter in absolute terms of our ANC investment.
Speaker #1: So no the material would say quarter changes . on quarter in I absolute terms of our ANC investment .
Peter Galbo: Great. Thanks for that, Luca. And Dirk, maybe to pivot to North America, I mean, I know it continues to kind of be a difficult operating environment. You know, volume trends are still a bit weak. There's a view maybe that this is more K shape or cyclical tide versus structural, and maybe in the context of just one of your largest peers announcing price cuts today in the snacking category. Would just love to get your perspective on, you know, the North American market, where you stand on that debate, and again, on the pricing front, kind of what the go-forward actions might look like there. Thanks very much.
Peter Galbo: Great. Thanks for that, Luca. And Dirk, maybe to pivot to North America, I mean, I know it continues to kind of be a difficult operating environment. You know, volume trends are still a bit weak. There's a view maybe that this is more K shape or cyclical tide versus structural, and maybe in the context of just one of your largest peers announcing price cuts today in the snacking category. Would just love to get your perspective on, you know, the North American market, where you stand on that debate, and again, on the pricing front, kind of what the go-forward actions might look like there. Thanks very much.
Speaker #4: Great . Thanks for that . Luca and maybe to pivot to North Dirk , mean , I know America . I continues to kind it of be a a difficult operating environment know , volume trends are still a bit weak .
Speaker #4: view k more shape There was a or cyclical tide . versus structural maybe in the context of just one of your largest peers announcing You price cuts today in the stacking .
Speaker #4: , would just love to get your category on the North American market perspective where you stand debate . And on that again , on the pricing front , kind of what the go forward actions might look like there .
Speaker #4: very Thanks much And .
Dirk Van de Put: Okay, Peter. Well, first of all, I think the thing in North America is the consumer. The consumer confidence is near a historic low. They're worried about overall affordability. They are fed up with the price increases. They don't feel good about their personal economic outlook. They doubt about job security. So what we are seeing is that the average shopping basket of the consumer in the US, whether you're in the higher or in the lower social economic classes, has not increased for the last 2, 3 years. Within that basket, they have spent more money on the basics, milk, meat, bread, and so on, and as a consequence, snacking is being affected. You can see that in all of the snacking categories.
Dirk Van de Put: Okay, Peter. Well, first of all, I think the thing in North America is the consumer. The consumer confidence is near a historic low. They're worried about overall affordability. They are fed up with the price increases. They don't feel good about their personal economic outlook. They doubt about job security. So what we are seeing is that the average shopping basket of the consumer in the US, whether you're in the higher or in the lower social economic classes, has not increased for the last 2, 3 years. Within that basket, they have spent more money on the basics, milk, meat, bread, and so on, and as a consequence, snacking is being affected. You can see that in all of the snacking categories.
Speaker #5: Peter Okay , . Well , first of all , I think thing in the the America is the the consumer , consumer confidence is , near historic low .
Speaker #5: They're worried about overall affordability. They are fed up with the price increases. They don't feel good about their personal economic outlook or about job security.
Speaker #5: So what we are seeing the the is that average shopping . basket of the consumer in the whether US , you're in , in the higher They doubt or the lower social economic classes , has not increased for the last 2 or 3 years within that basket , they have money basics .
Speaker #5: Milk , spent more bread and And as a consequence , snacking on the is so on . being affected . And you can see that in all of the snacking categories .
Dirk Van de Put: You talked about the K-shaped economy. There is clearly a group of consumers, the more wealthy consumers, that do spend differently in the sense that you can see that things like premium and better for you, are growing within the snacking markets, also some on the go. But the bulk of the consumers, they are really into value seeking. So what they do is they look for lower unit prices, they look for deals. If they have a bit more money, they will look for bulk packs or multi-packs, and they also shift channels, in from food and mass into value, club, and online. As you said, the biscuit category is showing a soft volume.
Dirk Van de Put: You talked about the K-shaped economy. There is clearly a group of consumers, the more wealthy consumers, that do spend differently in the sense that you can see that things like premium and better for you, are growing within the snacking markets, also some on the go. But the bulk of the consumers, they are really into value seeking. So what they do is they look for lower unit prices, they look for deals. If they have a bit more money, they will look for bulk packs or multi-packs, and they also shift channels, in from food and mass into value, club, and online. As you said, the biscuit category is showing a soft volume.
Speaker #5: talked You about the K economy . There is clearly a group of the consumers , more wealthy consumers that do spend differently in the sense that you can see that things like premium and better for you are are growing within the snacking markets .
Speaker #5: Also , some undergo , but the bulk of the consumers , they are really into value seeking . So what they do is they they look for lower unit a They look prices .
Speaker #5: for deals they . If have a bit more money , they will look packs or for bulk multi-packs . And they also channels shift in from mass food and into value .
Speaker #5: Club and online . As you said , biscuit the category is showing a soft volume was the last three months . It's down 4% in volume , 3% for the year 25 .
Dirk Van de Put: In the last three months, it's down 4% in volume, 3.3% for the year 2025. So overall, we don't necessarily see an immediate change as it relates to where the consumer is, and as a consequence, we need to adapt to these circumstances. So what do we do? We are going to invest more to drive awareness. We see the same as in chocolate in Europe. Penetration of our brands is not decreasing, or sometimes just a little bit. It's largely the frequency and the quantity bought that is being affected. So we're gonna invest in improving that frequency and the quantity bought. We're gonna use PPA to address some of the affordability. We are expanding in some of these channels that I was mentioning.
Dirk Van de Put: In the last three months, it's down 4% in volume, 3.3% for the year 2025. So overall, we don't necessarily see an immediate change as it relates to where the consumer is, and as a consequence, we need to adapt to these circumstances. So what do we do? We are going to invest more to drive awareness. We see the same as in chocolate in Europe. Penetration of our brands is not decreasing, or sometimes just a little bit. It's largely the frequency and the quantity bought that is being affected. So we're gonna invest in improving that frequency and the quantity bought. We're gonna use PPA to address some of the affordability. We are expanding in some of these channels that I was mentioning.
Speaker #5: So don't necessarily see an immediate relates change as it to where the consumer is consequence , we need to adapt to these circumstances .
Speaker #5: So, what do we do? We are, and as a result, going to invest more to drive awareness. We see the same as in chocolate in Europe.
Speaker #5: Penetration of our brands is not decreasing, or just a little bit. Sometimes, it's largely the frequency and the quantity bought that is being affected.
Speaker #5: So we're to invest in improving that frequency and the bought . We're going to use quantity PPA to address some of the affordability we are expanding in some of We mentioning .
Dirk Van de Put: We are under indexed, so we are pushing harder, and we are increasing our market share. We have offerings that are doing well. I'm thinking about a Perfect Bar, which is a protein offering, or a Tate's, a premium biscuit, or a Hu premium in chocolate, or Builder's Bar in the Clif range, which is also protein. They are all doing well, growing double digits, so we're gonna push harder on those those brands. And then lastly, I would say, we are activating a supply chain program, which is meant to run over the next three, four years. It's largely to modernize our operations, but it also will improve our efficiency and our costs. It'll give us more network flexibility. So overall, I would say we are entering a year in North America.
Dirk Van de Put: We are under indexed, so we are pushing harder, and we are increasing our market share. We have offerings that are doing well. I'm thinking about a Perfect Bar, which is a protein offering, or a Tate's, a premium biscuit, or a Hu premium in chocolate, or Builder's Bar in the Clif range, which is also protein. They are all doing well, growing double digits, so we're gonna push harder on those those brands. And then lastly, I would say, we are activating a supply chain program, which is meant to run over the next three, four years. It's largely to modernize our operations, but it also will improve our efficiency and our costs. It'll give us more network flexibility. So overall, I would say we are entering a year in North America.
Speaker #5: We are indexed. So we are pushing these harder, and we are growing our market share. And we have offerings that are doing increasingly well.
Speaker #5: I'm thinking about the perfect bar , which is a protein offer or a takes a premium a U premium in chocolate biscuit or or builder's bar in the Clif range , which is also protein .
Speaker #5: They are all doing growing well, double digit. So we're going harder on those, those, those. And then lastly, I would say we brands.
Speaker #5: are supply activating a chain program , which is meant to run over the next three , four years . It's largely to modernize our operations , but it also will improve our efficiency and our costs give us .
Speaker #5: more network We will flexibility . So overall , I would say we are entering a year in North we We are America . stronger in the sense that do more we will that investments understood better what works and what doesn't work .
Dirk Van de Put: We are stronger in the sense that we will do more investments, that we've understood better what works and what doesn't work, and that we have quite an extensive plan on things we want to do. As it relates to pricing itself, we started off 2025, and we're quite aggressive on promotions and on deals, working on price. I have to say, it didn't give us a return on our investment. So in the second half of 2025, we changed our strategy. We did a lot less promotion and pricing. As a consequence, our price realization went up, and I would say overall, our P&L improved in North America, but we lost some market share because our volume performance wasn't the same. But overall, I would say that probably was better for us.
Dirk Van de Put: We are stronger in the sense that we will do more investments, that we've understood better what works and what doesn't work, and that we have quite an extensive plan on things we want to do. As it relates to pricing itself, we started off 2025, and we're quite aggressive on promotions and on deals, working on price. I have to say, it didn't give us a return on our investment. So in the second half of 2025, we changed our strategy. We did a lot less promotion and pricing. As a consequence, our price realization went up, and I would say overall, our P&L improved in North America, but we lost some market share because our volume performance wasn't the same. But overall, I would say that probably was better for us.
Speaker #5: And that a quite an extensive plan on things we want to do as it relates to pricing itself . We started off 25 and quite we're aggressive on on deals , working promotions and price .
Speaker #5: I have to say it didn't give us a return on our investment. So in the second half of '25, we changed our strategy.
Speaker #5: We did a lot pricing less as a promotion and our realization went price up and I would say overall , our PNL improved in North America .
Speaker #5: But we lost some market share because our volume performance wasn't the same. But overall, I would say that probably was better for us.
Dirk Van de Put: So the way forward for us is better activations, interest the consumer more, make sure that they feel compelled to buy, buy snacks, our snacks, on every shopping trip. But we don't necessarily think that we need to decrease our prices to the magnitude that I heard from another company.
Dirk Van de Put: So the way forward for us is better activations, interest the consumer more, make sure that they feel compelled to buy, buy snacks, our snacks, on every shopping trip. But we don't necessarily think that we need to decrease our prices to the magnitude that I heard from another company.
Speaker #5: So the way forward for us is better activations. Interest to consumer—more. Make sure they feel they are compelled to buy snacks—that they buy snacks on every shopping trip.
Speaker #5: for So the way forward for us is better activations . Interest to consumer , more . Make sure feel they compelled to buy snacks that snacks on every shopping trip . But we don't necessarily think that we decrease our prices to the need to magnitude that I heard from .
Speaker #5: company From .
Speaker #5: company From .
Peter Galbo: Great. Thanks very much.
Peter Galbo: Great. Thanks very much.
Speaker #4: Great . Thank you .
Dirk Van de Put: Mm-hmm. Thank you, Peter.
Luca Zaramella: Mm-hmm. Thank you, Peter.
Speaker #4: much Thanks very .
Luca Zaramella: Thank you. We'll now move on to Megan Clapp with Morgan Stanley. Your line is now open.
Operator: Thank you. We'll now move on to Megan Clapp with Morgan Stanley. Your line is now open.
Speaker #1: Peter .
Speaker #3: Thank you .
Speaker #3: We'll now to Megan Clapp with Morgan Stanley . is now open .
Megan Clapp: Hi, good afternoon, Dirk, Luca. Thanks so much. I wanted to just maybe, Luca, follow up on the answer to Pete's first question, just to make sure I fully understand kind of the message you're talking about, is there are a lot of moving parts with cocoa and pricing. So when you talk about flat chocolate pricing in 2026, that's the expectation. Cocoa should be down, I think, significantly. But should we think about the net price cost relationship embedded in the guide as roughly neutral to the year because of the inventory accounting and the, you know, the elevated hedges flowing through, or is it still a net positive? I'm just trying to kind of understand the dynamics there.
Megan Clapp: Hi, good afternoon, Dirk, Luca. Thanks so much. I wanted to just maybe, Luca, follow up on the answer to Pete's first question, just to make sure I fully understand kind of the message you're talking about, is there are a lot of moving parts with cocoa and pricing. So when you talk about flat chocolate pricing in 2026, that's the expectation. Cocoa should be down, I think, significantly. But should we think about the net price cost relationship embedded in the guide as roughly neutral to the year because of the inventory accounting and the, you know, the elevated hedges flowing through, or is it still a net positive? I'm just trying to kind of understand the dynamics there.
Speaker #6: Hi . Good afternoon . Thanks so much . I wanted to just maybe look a follow up on on the answer to Pete's first question , just to make sure I fully understand kind of the message .
Speaker #6: You're you're talking about . another there are a lot of moving Is with , parts with Coco and pricing . So when you talk about flat pricing in chocolate 26 , that's the expectation .
Speaker #6: Coco should be down . I think significantly . But should we think about the net price cost relationship embedded in the is roughly guide neutral to the year because of the inventory accounting and the , you know , the elevated hedges flowing through , or is it still a net positive ?
Speaker #6: just trying kind of understand to the dynamics there . And I'm is the then , you know , idea that pricing if can kind of stabilize 27 .
Megan Clapp: And then, you know, is the idea that if, you know, pricing can kind of stabilize in 2026, cocoa resets lower in 2027, so that's really when the real profit recovery starts to show up?
Megan Clapp: And then, you know, is the idea that if, you know, pricing can kind of stabilize in 2026, cocoa resets lower in 2027, so that's really when the real profit recovery starts to show up?
Speaker #6: Cocoa 26, and that's really when the real profit starts to show up.
Speaker #6: Coco 26, and that's really when the real profit starts to show up. Recovery, yeah.
Luca Zaramella: Yeah. Thank you, Megan. The idea is to have a neutral to positive balance in chocolate, specifically between cost and pricing. Albeit pricing is not gonna move much. As I said, there is an element of cost that was locked for 2026. So in general, you should think about pricing net of cost as slightly positive to neutral for chocolate. That's the way we have prepared the plan.
Luca Zaramella: Yeah. Thank you, Megan. The idea is to have a neutral to positive balance in chocolate, specifically between cost and pricing. Albeit pricing is not gonna move much. As I said, there is an element of cost that was locked for 2026. So in general, you should think about pricing net of cost as slightly positive to neutral for chocolate. That's the way we have prepared the plan.
Speaker #1: Thank you Megan . The idea is to have a positive balance in chocolate specifically neutral to between cost and pricing . And albeit pricing not going to move much .
Speaker #1: As I is an is is said , there element of cost that was for 2026 . So in general , you should think about locked pricing costs as slightly positive to to neutral for chocolate .
Speaker #1: That's the way we have prepared the plan.
Megan Clapp: Okay. That's super helpful. Thank you. Then just to come back to the organic sales outlook, 0 to 2%, you've got some nice momentum in emerging markets, I think, finished the year around high single digits. So is that the expectation for 2026, that, you know, emerging markets can kind of be in that high single digit range? And if so, I think mathematically would imply kind of developed markets decline in the low to mid-single digit range. So, you know, is that math fair? And just any way to kind of think about the US versus Europe in relation to that?
Megan Clapp: Okay. That's super helpful. Thank you. Then just to come back to the organic sales outlook, 0 to 2%, you've got some nice momentum in emerging markets, I think, finished the year around high single digits. So is that the expectation for 2026, that, you know, emerging markets can kind of be in that high single digit range? And if so, I think mathematically would imply kind of developed markets decline in the low to mid-single digit range. So, you know, is that math fair? And just any way to kind of think about the US versus Europe in relation to that?
Speaker #1: .
Speaker #6: that's super helpful . Okay , Thank you . And then just to come back to the organic sales outlook , 0 to 2% , you've got some nice momentum in emerging markets I think finished the around high year single So is that the expectation for digits .
Speaker #6: can kind of emerging markets 2026 that be in that single digit range high think mathematically would if kind of developed markets decline in the low to mid single digit range .
Speaker #6: So is that math fair and just any way to kind of think about the US versus Europe and relation to that .
Luca Zaramella: The emerging markets will continue growing, and hopefully, they will do even better than what is embedded, quite frankly, in the guidance. We're happy with the momentum we are seeing in both Latin America and EMEA now. In both segments, we have a meaningful presence in chocolate, and if you look at how much we price, that contribution is not gonna be there for 2026. But on the flip side, there should be less elasticity. Now, I would say majority of the volume declines that you see, particularly in EMEA, but also in Latin America, are due to PPA. So the volume momentum is really there when you take out the PPA impact.
Luca Zaramella: The emerging markets will continue growing, and hopefully, they will do even better than what is embedded, quite frankly, in the guidance. We're happy with the momentum we are seeing in both Latin America and EMEA now. In both segments, we have a meaningful presence in chocolate, and if you look at how much we price, that contribution is not gonna be there for 2026. But on the flip side, there should be less elasticity. Now, I would say majority of the volume declines that you see, particularly in EMEA, but also in Latin America, are due to PPA. So the volume momentum is really there when you take out the PPA impact.
Speaker #1: The markets emerging will continue growing, and hopefully, they will do even better than what is embedded, quite frankly, in the guidance.
Speaker #1: We're happy with the momentum we are seeing both in Latin America and and EMEA . Now in both segments , we have a meaningful presence in .
Speaker #1: We're happy with the momentum we are seeing both in Latin America and and EMEA . Now in both segments , we have a meaningful presence in chocolate if you And look at how much we priced that contribution is , is not going to be there for 2026 .
Speaker #1: But on the flip side , there should be less elasticity . would Now , I say majority of the volume declines that you see , particularly in EMEA , but also in Latin America , are due to PPA .
Speaker #1: So the momentum is is there really when you take out the impact . The PPA idea for 2026 is again , to grow this market pretty much at the same level .
Luca Zaramella: The idea for 2026 is, again, to grow this market pretty much at the same level, but there will be a little bit less contribution from pricing and more contribution from volume mix.
Luca Zaramella: The idea for 2026 is, again, to grow this market pretty much at the same level, but there will be a little bit less contribution from pricing and more contribution from volume mix.
Speaker #1: there will be But a little bit less contribution from pricing and more contribution from volume mix .
Speaker #1: there will be But a little bit less contribution from pricing and more contribution from volume mix .
Megan Clapp: Okay. Thanks, Luca.
Megan Clapp: Okay. Thanks, Luca.
Luca Zaramella: Thank you, Megan.
Luca Zaramella: Thank you, Megan.
Speaker #6: Thanks, okay. Luca.
Speaker #1: Thank Megan you .
Shep Dunlap: Thank you. We'll now move on to Michael Lavery with Piper Sandler. Your line is now open.
Operator: Thank you. We'll now move on to Michael Lavery with Piper Sandler. Your line is now open.
Speaker #3: Thank you. We'll now move on to Michael Lavery with Piper Sandler. Your line is now open.
Michael Lavery: Thank you. Yeah. You touched on the advertising spend or the tailwind in Q4, but you've talked about stepping up investments next year. Can you give a sense of order of magnitude, and would 2026 be basically back to normal? Is there, you know, any kind of push beyond that? How do we think about what kind of investment level you've got in store for the year?
Michael Lavery: Thank you. Yeah. You touched on the advertising spend or the tailwind in Q4, but you've talked about stepping up investments next year. Can you give a sense of order of magnitude, and would 2026 be basically back to normal? Is there, you know, any kind of push beyond that? How do we think about what kind of investment level you've got in store for the year?
Speaker #7: Thank you . Yeah . You talked on the advertising spend as a tailwind for Q in but you've stepping up talked about investments next year .
Speaker #7: you Can give a sense of order of magnitude and what would Basically , 2026 be ? back to normal ? Is there you know , any any kind of push beyond that ?
Speaker #7: think we about what of How do kind investment level you've got in store year for the ?
Luca Zaramella: So Michael, if you look at the SG&A line, it was clearly down year on year, 2025 on 2024. One of the drivers there is continued overhead savings, but we had to tap a little bit into AMC too. We said many times that we didn't touch the working media line, but we touched the non-working media predominantly. The idea is to continue with lower non-working media, but to clearly step up in the working part. And if you look over a couple of years, between 2024 and 2026, we will more than recover what we had to pull back in 2025 into the overall line.
Luca Zaramella: So Michael, if you look at the SG&A line, it was clearly down year on year, 2025 on 2024. One of the drivers there is continued overhead savings, but we had to tap a little bit into AMC too. We said many times that we didn't touch the working media line, but we touched the non-working media predominantly. The idea is to continue with lower non-working media, but to clearly step up in the working part. And if you look over a couple of years, between 2024 and 2026, we will more than recover what we had to pull back in 2025 into the overall line.
Speaker #1: So Michael at , if you look the line , it was clearly down year year on 25 on on 24 , one of the drivers there is continued over savings .
Speaker #1: But we had tap a little bit to into ANC two . We said many we times that touch the working media line , didn't but we touched the Nonworking media , predominantly .
Speaker #1: The idea is to continue with lower non-working media , but to clearly step up and the part , in and if you look over a couple of years between 24 and 26 , we will more than recover what we had to pull back in in 25 into the overall line .
Luca Zaramella: On the other part of SG&A, ergo, the overhead part, we will continue with cost savings, but we will have to step up a little bit the annual incentive plan. So all in all, the investments in AMC over two years, I think it's, it's gonna be substantial. If you take 24 to 26, it's up quite meaningfully.
Luca Zaramella: On the other part of SG&A, ergo, the overhead part, we will continue with cost savings, but we will have to step up a little bit the annual incentive plan. So all in all, the investments in AMC over two years, I think it's, it's gonna be substantial. If you take 24 to 26, it's up quite meaningfully.
Speaker #1: the On other of part SG&A , ergo , the overheads part , continue we will with cost savings , will have to step up a The but we incentive annual So all little bit .
Speaker #1: plan . investments in ANC over two years , I think it's it's going be to substantial . If you take it's up 24 to 26 , quite meaningfully .
Michael Lavery: Okay, that's helpful. And just back to emerging markets, maybe touch on that, specifically maybe LatAm. It's down now a couple of years. What can you do to grow volumes there? And can you give any sense maybe of what kind of assumptions would be baked into the guidance?
Michael Lavery: Okay, that's helpful. And just back to emerging markets, maybe touch on that, specifically maybe LatAm. It's down now a couple of years. What can you do to grow volumes there? And can you give any sense maybe of what kind of assumptions would be baked into the guidance?
Speaker #7: Okay . helpful . And That's just back to markets . Maybe emerging touch on that specifically . Maybe Latam . It's down now couple of .
Speaker #7: What do you do to grow volumes there? And can you give any sense, maybe, of what kind of assumptions would be baked into the guidance?
Luca Zaramella: Look, I think that the simple answer there is that in LatAm there is Argentina, which went through a quite a bit of economic turmoil and there were material issues in the country. And on top of that, we decided to protect working capital and not to extend payment terms to anybody. And we did quite, I believe, a good work in in keeping the business in accordance to our operating principles, that are protect cash in Argentina and bring the cash home. That's what we did. When you strip out Argentina and you look around-
Luca Zaramella: Look, I think that the simple answer there is that in LatAm there is Argentina, which went through a quite a bit of economic turmoil and there were material issues in the country. And on top of that, we decided to protect working capital and not to extend payment terms to anybody. And we did quite, I believe, a good work in in keeping the business in accordance to our operating principles, that are protect cash in Argentina and bring the cash home. That's what we did. When you strip out Argentina and you look around-
Speaker #1: Look I think the simple answer there is that in Latam there is Argentina , which went through a quite a bit of economic turmoil , and there were material issues in the country .
Speaker #1: of on top that And , we protect decided to working capital and not to extend terms to anybody . And we payment did quite , I believe , a good work in in keeping the business in accordance to our operating principles that are protect cash and bring the cash home .
Speaker #1: That's what we did. Argentina—strip out Argentina—and you look around, and clearly Brazil got a little bit impacted by elasticity in chocolate.
Dirk Van de Put: ...Clearly, Brazil got a little bit impacted by elasticity in chocolate, but Brazil is one of the best performing markets that we have, top and bottom line. They did an amazing job in terms of PPA and minimizing elasticity. We are growing quite well outside of chocolate. If you look at Mexico, there was a big comeback. The country is now in growth territory and doing fairly well. And so the two major markets in LATAM are doing quite well. It is Argentina masking a little bit the performance of the region.
Luca Zaramella: ...Clearly, Brazil got a little bit impacted by elasticity in chocolate, but Brazil is one of the best performing markets that we have, top and bottom line. They did an amazing job in terms of PPA and minimizing elasticity. We are growing quite well outside of chocolate. If you look at Mexico, there was a big comeback. The country is now in growth territory and doing fairly well. And so the two major markets in LATAM are doing quite well. It is Argentina masking a little bit the performance of the region.
Speaker #1: But Brazil is one of the best performing markets that Top and bottom we have . did an amazing job of in terms PPA and minimizing elasticity .
Speaker #1: We are growing well outside of quite of chocolate . If you look at Mexico , there was a big comeback . country is The now in growth territory and doing fairly well .
Speaker #1: And two major markets in the region are LATAM, doing quite well. It is Argentina masking a little bit the performance of the region.
Michael Lavery: Okay, that's helpful. Thanks so much.
Michael Lavery: Okay, that's helpful. Thanks so much.
Speaker #7: Okay. That's helpful. Thanks so much.
Shep Dunlap: Thank you. We'll now move on to Chris Carey with Wells Fargo Securities. Your line is now open.
Operator: Thank you. We'll now move on to Chris Carey with Wells Fargo Securities. Your line is now open.
Speaker #3: Thank you . We'll now move on to Chris Carey with Wells Fargo Securities . Your line is now open
Speaker #3: .
Chris Carey: Hi, everyone. Thank you for the question. I wanted to start with this comment on the company's goal to demonstrate the significant volume trajectory change over the course of 2026. Can you help us understand regionally where that change might be occurring? You know, some of the key drivers, for example, the channel strategies that you have in North America, are those expected to be material? European or comps in Europe get quite a bit easier into the back half of the year? You mentioned the piece with PPA impacting emerging market volumes, a touch, and elasticities getting better. Just give us a sense of what significant volume trajectory improvement looks like and contextualizing a bit where that's coming from and why.
Chris Carey: Hi, everyone. Thank you for the question. I wanted to start with this comment on the company's goal to demonstrate the significant volume trajectory change over the course of 2026. Can you help us understand regionally where that change might be occurring? You know, some of the key drivers, for example, the channel strategies that you have in North America, are those expected to be material? European or comps in Europe get quite a bit easier into the back half of the year? You mentioned the piece with PPA impacting emerging market volumes, a touch, and elasticities getting better. Just give us a sense of what significant volume trajectory improvement looks like and contextualizing a bit where that's coming from and why.
Speaker #8: Everyone, hi. Thank you for the question. I wanted to start with this comment on the company's goal to demonstrate significant volume trajectory change over the course of 2026.
Speaker #8: Can you help us understand where regionally that change might be occurring ? Some of the key drivers for example , the the channel strategies that you have in North are America expected to be material , European or comps in Europe get quite a bit easier into the back half of the year .
Speaker #8: You mentioned the piece with PPA impacting emerging market volumes—are you seeing any touch elasticities you can give us, to better understand? Just a sense of what a significant volume trajectory improvement looks like, and contextualizing a bit where that's coming from and why.
Dirk Van de Put: Yes, I mean, if I go through the regions, we clearly expect EMEA overall, if you look at how we're doing in India, in Australia, China coming back. So we see EMEA as being a big source of volume growth for us. So that's certainly a region where we will see some good performance. If we then look at Latin America, as Luca was saying, there also we think that it's going to be quite a good year for us. North America, as I was explaining, the consumer confidence isn't there. The biscuit category is soft.
Dirk Van de Put: Yes, I mean, if I go through the regions, we clearly expect EMEA overall, if you look at how we're doing in India, in Australia, China coming back. So we see EMEA as being a big source of volume growth for us. So that's certainly a region where we will see some good performance. If we then look at Latin America, as Luca was saying, there also we think that it's going to be quite a good year for us. North America, as I was explaining, the consumer confidence isn't there. The biscuit category is soft.
Speaker #5: Yes , I I if mean , if I go through the the regions , we clearly EMEA overall , if you look at how we're doing in , in , in India , in , in Australia , China coming back .
Speaker #5: So we , we see Amea as being a big source of , of volume growth for us . So that certainly a region that where we will see some good performance , if I then look to America Latin as Luca was saying , there also , we think that to be it's going quite a good year for us .
Speaker #5: North America . As I was the explaining , consumer confidence , isn't category is there . biscuit soft . We expect the that volume the see in the category of 4% will ease .
Dirk Van de Put: We expect that the volume decline that you see in the category of 4% will ease, but we are not exactly counting on volume growth in North America. And then in Europe, what I expect there is that, First of all, in our other categories, we had a pretty good year already in 2025. We expect that to continue. I'm talking about biscuits, cakes, pastries, and meals. And in chocolate, the price increase, as we discussed, is gonna ease. In fact, we are readjusting some of our pricing in certain markets. So all that we expect also will have a positive effect on volumes as compared to 2025. So hopefully that gives you an idea where the volume growth is gonna come from.
Dirk Van de Put: We expect that the volume decline that you see in the category of 4% will ease, but we are not exactly counting on volume growth in North America. And then in Europe, what I expect there is that, First of all, in our other categories, we had a pretty good year already in 2025. We expect that to continue. I'm talking about biscuits, cakes, pastries, and meals. And in chocolate, the price increase, as we discussed, is gonna ease. In fact, we are readjusting some of our pricing in certain markets. So all that we expect also will have a positive effect on volumes as compared to 2025. So hopefully that gives you an idea where the volume growth is gonna come from.
Speaker #5: But we are not exactly counting on volume growth in North America . And then in Europe . What I expect there is that the first of all , in our other categories , we pretty good a year had already in 25 .
Speaker #5: We expect that to continue . And talking about biscuits , cakes and pastries and meals . And in chocolate , the price , as we increase discussed , is going to ease .
Speaker #5: fact , we are readjusting some of our pricing in In markets . So all that we expect also will have a positive certain effect compared volumes as to to on 25 .
Speaker #5: So hopefully that gives you an idea where the is going to volume come growth from the the phasing during the is as these different activities come to bear , we expect that gradually to be better .
Dirk Van de Put: The phasing during the year is as these different activities come to bear, we expect that gradually to be better, and also the lapping effect will help us over the year.
Dirk Van de Put: The phasing during the year is as these different activities come to bear, we expect that gradually to be better, and also the lapping effect will help us over the year.
Speaker #5: And also the will us effect will help over the . year
Chris Carey: That's great. And I know it's been broached a bit, but just to confirm, as we get into 2027, and really I'm asking just because it was included in the prepared remarks, can you give us a sense of the investments that will have been lapped going into 2027? Should we expect the media investment to be done in 2026, the rebasing of media, the rebasing of comp, the investments into channel expansion strategy, such that going into 2027, we're really just thinking about an improved complexion of the top line, gross margins, getting a bit more life against a lower cocoa, you know, price and more operating leverage to SG&A?
Chris Carey: That's great. And I know it's been broached a bit, but just to confirm, as we get into 2027, and really I'm asking just because it was included in the prepared remarks, can you give us a sense of the investments that will have been lapped going into 2027? Should we expect the media investment to be done in 2026, the rebasing of media, the rebasing of comp, the investments into channel expansion strategy, such that going into 2027, we're really just thinking about an improved complexion of the top line, gross margins, getting a bit more life against a lower cocoa, you know, price and more operating leverage to SG&A?
Speaker #8: . And great I know it's bit , but broached a just That's just to confirm as been get into 2027 and , and really I'm asking just as we was included in the prepared remarks , give us a can you sense of the investments that will been have lapped going into 2027 ?
Speaker #8: expect Should we media investment to be 26 ? done in The rebasing of media , the rebasing of Comp , the the investments into channel expansion strategies that into 2027 , going we're we're really thinking about a improved an complexion of top the the line growth margins getting a bit more life against lower cocoa price .
Speaker #8: And more more operating leverage to SG&A is . Or there multi-year investments that will be continuing to to come into the model as as we get into 2027 ?
Chris Carey: Or is there multiyear investments that will be continuing to come into the model as we get into 2027? I realize we may get more information on this at CAGNY, but again, it was in the prepared remarks, so I figured I'd get a bit more context on that. Thanks.
Chris Carey: Or is there multiyear investments that will be continuing to come into the model as we get into 2027? I realize we may get more information on this at CAGNY, but again, it was in the prepared remarks, so I figured I'd get a bit more context on that. Thanks.
Speaker #8: realize I we may get information more at on this it the But again , remarks , so I figured I'd I'd get a bit more Thanks that .
Speaker #8: context on
Dirk Van de Put: Yeah. So, as we explained, in 26, we are taking a step forward and significantly increase our investments in working media as compared to 25. Take into account that 25, we took a step down, largely in non-working media, but also a little bit in working media. For 27, we expect that we will do another step up in investments. We believe that we have to continue to invest in our brands. The opportunity is big, and we want to drive volume growth, because that needs to be the first base of growth for the company, combined with, hopefully over time, a little bit of pricing. So that's our thinking. As it relates to margins, we feel that overall, from a commodity perspective, that things will ease, particularly in cocoa.
Dirk Van de Put: Yeah. So, as we explained, in 26, we are taking a step forward and significantly increase our investments in working media as compared to 25. Take into account that 25, we took a step down, largely in non-working media, but also a little bit in working media. For 27, we expect that we will do another step up in investments. We believe that we have to continue to invest in our brands. The opportunity is big, and we want to drive volume growth, because that needs to be the first base of growth for the company, combined with, hopefully over time, a little bit of pricing. So that's our thinking. As it relates to margins, we feel that overall, from a commodity perspective, that things will ease, particularly in cocoa.
Speaker #5: Yeah. So as we explained, in '26 we are taking a step forward and significantly increasing our investment in working media as compared to '25, taking into account that in '25, we took a step down in nonworking, largely, and also a little bit in media, but working media in...
Speaker #5: For '27, we expect that we will do another step up in investments. We believe that we have to continue to invest in our brands.
Speaker #5: The opportunity big is we want to drive volume growth; that needs to be the first base of growth for the company, combined with a little bit of pricing.
Speaker #5: that's that's our So thinking time , a as it to margins . We that feel perspective , things will that And cocoa . so we commodity particularly in can see overall from we a ease , significant uplift in chocolate our margins in 27 , which be divided will by reinvesting part of it and part flowing to the bottom line .
Dirk Van de Put: And so we, we can see a significant uplift in our chocolate margins in 2027, which will be divided by reinvesting part of it and part flowing to the bottom line. And so we will, we are aiming for a strong EPS growth in 2027, but at the same time, we wanna keep on investing in our brand. So we, we are not planning to flow everything to the bottom line, if that would be the thinking.
Dirk Van de Put: And so we, we can see a significant uplift in our chocolate margins in 2027, which will be divided by reinvesting part of it and part flowing to the bottom line. And so we will, we are aiming for a strong EPS growth in 2027, but at the same time, we wanna keep on investing in our brand. So we, we are not planning to flow everything to the bottom line, if that would be the thinking.
Speaker #5: And so we will for a are aiming we growth in 27 , but at the same time , to keep on investing in brands .
Speaker #5: So we are not planning to flow everything to the bottom line. That would be the thinking, if we were.
Operator: ... Thank you all. Appreciate it.
Chris Carey: ... Thank you all. Appreciate it.
Dirk Van de Put: Thank you.
Dirk Van de Put: Thank you.
Speaker #8: Thank you all. Appreciate it.
Speaker #1: you Thank .
Shep Dunlap: Thank you, and we'll go next to David Palmer with Evercore ISI. Your line is now open.
Shep Dunlap: Thank you, and we'll go next to David Palmer with Evercore ISI. Your line is now open.
Speaker #3: And we'll go next Thank you . to David Palmer with Evercore ISI . Your line open is now .
David Palmer: Thank you. Sort of a big picture question on European chocolate in your division there. I wonder, you know, how are you thinking about the path to a profitability recovery there to sort of a pre-2025 levels that we saw for a few years, if you think that is even the norm, you know, that, that where we saw profitability there. And I wonder, with prices having come down, is 2027 the beginning of a recovery? And, you know, what, you know, is there a path back to pre-2025 levels of profitability, and how do you think that would play out? And I have a follow-up.
David Palmer: Thank you. Sort of a big picture question on European chocolate in your division there. I wonder, you know, how are you thinking about the path to a profitability recovery there to sort of a pre-2025 levels that we saw for a few years, if you think that is even the norm, you know, that, that where we saw profitability there. And I wonder, with prices having come down, is 2027 the beginning of a recovery? And, you know, what, you know, is there a path back to pre-2025 levels of profitability, and how do you think that would play out? And I have a follow-up.
Speaker #9: Thank you . Sort of a big picture question on European chocolate and your there division . I wonder how are you thinking about the path to a profitability recovery to sort of a there 25 levels that we saw for a few years .
Speaker #9: If you think that is even the, you know, that that's where norm, we saw profitability there, and I wonder, with prices having come down, is '27 the beginning of a recovery?
Speaker #9: And you know what is there you know , a path back to pre 25 levels of profitability . And how do you think that would play out .
Speaker #9: And I have a follow up .
Dirk Van de Put: So, the idea, David, is to go back to the profit pool as it used to be, and hopefully even a little bit better, because remember, we really have growth opportunities even in Europe and, quite frankly, we still have to invest quite a bit of AMC and expand both in the developed part of Europe, but also in the developing part of Europe. We still have plenty of opportunities in terms of price points, channels, segment within chocolate, and our goal is to grow the chocolate business in Europe after the meaningful price increases we have taken in 2025.
Luca Zaramella: So, the idea, David, is to go back to the profit pool as it used to be, and hopefully even a little bit better, because remember, we really have growth opportunities even in Europe and, quite frankly, we still have to invest quite a bit of AMC and expand both in the developed part of Europe, but also in the developing part of Europe. We still have plenty of opportunities in terms of price points, channels, segment within chocolate, and our goal is to grow the chocolate business in Europe after the meaningful price increases we have taken in 2025.
Speaker #1: The idea, so, is David to go back to the profit pool as it be used to, hopefully—and even a little bit better.
Speaker #1: Because remember we really have growth opportunities even in Europe . And quite frankly , we still have to bit of ANC quite a invest expand both and in the developed part of of Europe , but also in the developing part of Europe .
Speaker #1: We still have plenty of in terms of price point channels opportunities , segment within chocolate and our goal is and to grow the chocolate business in Europe after the meaningful price increases , have .
Speaker #1: We have taken in '25. If cocoa ranges at around $3,000, our goal is to get into '27 with a much improved in situation and to really be able to get back to the all profit pool.
Dirk Van de Put: If cocoa ranges at around $3,000, our goal is to get into 2027 with a much improved situation and to really be able to get back to the old profit pool. And if we have to make some selective price investments, we will make them. I think if you look at the way the 2026 plan is structured in Europe, there are more promotions. We are going to offer more value to some of the consumers. And all in all, I think while 2026 can be a new base, 2027 can really be a step change for our chocolate market overall around the world, including Europe.
Luca Zaramella: If cocoa ranges at around $3,000, our goal is to get into 2027 with a much improved situation and to really be able to get back to the old profit pool. And if we have to make some selective price investments, we will make them. I think if you look at the way the 2026 plan is structured in Europe, there are more promotions. We are going to offer more value to some of the consumers. And all in all, I think while 2026 can be a new base, 2027 can really be a step change for our chocolate market overall around the world, including Europe.
Speaker #1: And if we have to make some selective price investments, we will make them. I think if you look at the way the '26 plan is structured in Europe, there is more to value, offer more, are going to some of...
Speaker #1: And all consumers I in all , the while 26 can be a new base , 27 can really be a step change for our chocolate market overall around the world , including Europe
Speaker #1: And all consumers I in all , the while 26 can be a new base , 27 can really be a step change for our chocolate market overall around the world , including Europe .
David Palmer: Are there any sort of milestones this year that will... that you're gonna be really watching for, whether it's perhaps how you see the retailer brand pricing works or your own price elasticity levels remaining better than a certain threshold? I mean, what are some things that you're gonna be looking for and that we could even look for in the data?
David Palmer: Are there any sort of milestones this year that will... that you're gonna be really watching for, whether it's perhaps how you see the retailer brand pricing works or your own price elasticity levels remaining better than a certain threshold? I mean, what are some things that you're gonna be looking for and that we could even look for in the data?
Speaker #9: Are there are there any sort of milestones year that this that you're going to will really watching for , whether it's perhaps how retailer brand , you see the brand works or own price pricing elasticity levels remaining your better than certain threshold .
Speaker #9: I mean , what are some things that you're going to be looking for and that we can even for in the data ?
Dirk Van de Put: It is potential competitive reaction, as we said a couple of times already.
Luca Zaramella: It is potential competitive reaction, as we said a couple of times already.
Speaker #1: It is potential competitive reaction . As we said a couple of times already .
David Palmer: Got it. Thank you.
David Palmer: Got it. Thank you.
Speaker #9: Got it. Thank you.
Shep Dunlap: Thank you. We'll now move on to Scott Marks with Jefferies. Your line is now open.
Operator: Thank you. We'll now move on to Scott Marks with Jefferies. Your line is now open.
Speaker #3: Thank you. We'll now move on to Scott Marks with Jefferies. Your line is now open.
Scott Marks: Hey, good afternoon, all. Thanks so much for taking our questions. First one from me. I don't believe I've, I've heard any discussion thus far about GLP-1 and some of the more recent developments in that market, especially with some of the newer oral medications. So just wondering if you can share a bit about how you're thinking about that, and what you're expecting, you know, on that front for this year and beyond. Thanks.
Scott Marks: Hey, good afternoon, all. Thanks so much for taking our questions. First one from me. I don't believe I've, I've heard any discussion thus far about GLP-1 and some of the more recent developments in that market, especially with some of the newer oral medications. So just wondering if you can share a bit about how you're thinking about that, and what you're expecting, you know, on that front for this year and beyond. Thanks.
Speaker #10: Hey . Good afternoon all . Thanks so much for taking our questions . First one for me , I don't believe I've heard any discussion .
Speaker #10: Far, thus, about some of the more recent developments in GLP-1, and in that market, especially with some of the newer oral medications.
Speaker #10: just wondering if you can share a So bit about how you're thinking about that and what you're expecting . You know , on that front for this year and Thanks beyond ?
Dirk Van de Put: Yes. Well, we model it out every quarter, basically based on the latest information. We have noted the fact that the price of some of it has come down. We have noted that there is oral being approved. We've taken into account the estimates as it relates to that. I have to say that up to our opinion, that will not significantly change the estimates that we've had so far. The estimates we had so far, first of all, we do not see a short-term impact on our business, because there is a very modest adoption rate right now, and also the calorie reduction is relatively benign, that we see.
Dirk Van de Put: Yes. Well, we model it out every quarter, basically based on the latest information. We have noted the fact that the price of some of it has come down. We have noted that there is oral being approved. We've taken into account the estimates as it relates to that. I have to say that up to our opinion, that will not significantly change the estimates that we've had so far. The estimates we had so far, first of all, we do not see a short-term impact on our business, because there is a very modest adoption rate right now, and also the calorie reduction is relatively benign, that we see.
Speaker #10: .
Speaker #5: Yes . Well , we we model it out every , every quarter , basically based on latest the information and we have noted the fact that the price of of it has come down .
Speaker #5: We have there is oral some , some noted that , oral being approved . We've taken into account estimates as it's as it the relates to that .
Speaker #5: have to And I say up that to our opinion , that not will significantly change the estimates that we've had so far . So and the estimates we had so far , first of all , do not we see a short term impact on our business because there is a very modest adoption rate right now .
Speaker #5: And also the calorie reduction is relatively benign that we see . But if we expand ten years and we adoption rate in the US , take an be somewhere between 10 and 20% .
Dirk Van de Put: But if we expand 10 years and we take an adoption rate in the US, which would be somewhere between 10 and 20 percent, and even then, we do not see a significant effect on our overall business. We believe that over that period of time, it could have a 0.5% to 1.5% effect on our overall volumes, so almost negligible over a period of 10 years. So at this stage, we feel that it is having a major impact on our business.
Dirk Van de Put: But if we expand 10 years and we take an adoption rate in the US, which would be somewhere between 10 and 20 percent, and even then, we do not see a significant effect on our overall business. We believe that over that period of time, it could have a 0.5% to 1.5% effect on our overall volumes, so almost negligible over a period of 10 years. So at this stage, we feel that it is having a major impact on our business.
Speaker #5: And even then we we do not see a significant effect on on our overall We business . believe that over that period of time , it could have a 0.5 to 1.5% effect on our overall volumes .
Speaker #5: So almost negligible over a period of So ten years . at this stage , I can't say that we feel that it is having a major impact on our business .
Scott Marks: Appreciate the color there. Maybe next question from me. You made some comments in the prepared remarks about continued investments in cocoa growing regions, maybe outside of West Africa. Just wondering if you can share an update on some of those investments and how you're thinking about those moving forward relative to kind of the traditional cocoa growing regions. Thanks.
Scott Marks: Appreciate the color there. Maybe next question from me. You made some comments in the prepared remarks about continued investments in cocoa growing regions, maybe outside of West Africa. Just wondering if you can share an update on some of those investments and how you're thinking about those moving forward relative to kind of the traditional cocoa growing regions. Thanks.
Speaker #10: Appreciate the color there. Maybe next question for me. You made some comments in the prepared remarks about continued investments in cocoa growing regions.
Speaker #10: Maybe outside of West Africa . Just wondering if you can share an update on some of those investments and how you're you're thinking about moving forward relative to kind of the cocoa traditional growing regions ?
Dirk Van de Put: Yes, I think it's just better from an overall long-term risk management perspective, that we balance our supply of cocoa into different geographical regions. Those regions are largely Latin America, mainly, and also a little bit in Asia, in places like India and Indonesia. In Latin America, the countries that are stepping up are largely Ecuador and Brazil, different farming models. In Brazil, we see some large farms coming up, and we are having long-term agreements with them to supply us. And then in Ecuador, it's smaller farmers, but who are getting together, and we see those countries significantly increase their output. And so over time, that might not give the best cocoa price, but we think the current price that we see should be sustainable.
Dirk Van de Put: Yes, I think it's just better from an overall long-term risk management perspective, that we balance our supply of cocoa into different geographical regions. Those regions are largely Latin America, mainly, and also a little bit in Asia, in places like India and Indonesia. In Latin America, the countries that are stepping up are largely Ecuador and Brazil, different farming models. In Brazil, we see some large farms coming up, and we are having long-term agreements with them to supply us. And then in Ecuador, it's smaller farmers, but who are getting together, and we see those countries significantly increase their output. And so over time, that might not give the best cocoa price, but we think the current price that we see should be sustainable.
Speaker #10: Thanks
Speaker #10: .
Speaker #5: Yes, I think it's just better from an overall long-term risk management perspective that we balance our supply of cocoa into different geographical regions.
Speaker #5: Those regions are largely Latin America mainly , and also a little bit in Asia . places like India In Indonesia and , in Latin America , the countries that are stepping up are Ecuador and Brazil .
Speaker #5: Different largely models in Brazil , we we see some large farms coming up and we we are having long term agreements with them to supply us .
Speaker #5: And then in Ecuador , it's smaller farmers , but who are getting together and we we see those those countries significantly increase their output .
Speaker #5: And so over time, that might not give the best cocoa price. But we think the current price that we see should be sustainable.
Dirk Van de Put: But it will significantly decrease the risk of events like a bad crop or a disease that affect the crop in a country, that is going to have a big impact on the overall cocoa market, as we currently see, whereby Ghana and Ivory Coast have close to 60%, 65% of the global cocoa supply. The other one I would say that is worthwhile is that I think over time there will be more and more lab-grown cocoa that will become available, not GMO, but lab-grown. And we think that there will be an interest from the European Commission and the US government to approve that sort of cocoa. Why?
Dirk Van de Put: But it will significantly decrease the risk of events like a bad crop or a disease that affect the crop in a country, that is going to have a big impact on the overall cocoa market, as we currently see, whereby Ghana and Ivory Coast have close to 60%, 65% of the global cocoa supply. The other one I would say that is worthwhile is that I think over time there will be more and more lab-grown cocoa that will become available, not GMO, but lab-grown. And we think that there will be an interest from the European Commission and the US government to approve that sort of cocoa. Why?
Speaker #5: But it will significantly decrease the risk of events like a bad or crop a affects the disease that crop in a country that that is going to have a big impact on , on the overall cocoa market , as we currently see , whereby and Ivory Ghana Coast have close to 60% , 65% of the global cocoa supply .
Speaker #5: The other one , I would say that is worthwhile is that I think over there time more and more will be lab grown cocoa that will become available , not GMO , but lab grown .
Speaker #5: We think that there will be interest from the European Commission and the US government to approve that sort of cocoa. Why?
Dirk Van de Put: Because it has significant beneficial effect in the sense that all the negatives that surround the cocoa supply chain would not be there as it relates to climate and other social effects. So in that sense, that's also a direction that we are investing in and supporting.
Dirk Van de Put: Because it has significant beneficial effect in the sense that all the negatives that surround the cocoa supply chain would not be there as it relates to climate and other social effects. So in that sense, that's also a direction that we are investing in and supporting.
Speaker #5: Because it has significant beneficial effect, in the sense that all the negatives that surround the cocoa supply chain would be there as it not be—relates to climate and other social effects in that sense, that's also.
Speaker #5: A direction that we are investing in and supporting, so—
Scott Marks: Appreciate it. Thanks. Pass it on.
Scott Marks: Appreciate it. Thanks. Pass it on.
Speaker #10: Thanks. Appreciate it. Pass it.
Dirk Van de Put: Thank you. I think that was the last question for today. I would like to thank you for your attention. I would like to reiterate the fact that we will be going deeper in CAGNY into the European chocolate situation and give you the details on how we're planning to tackle it. We'll also go deeper in our North American situation and, and what our plans are there, and we will cover the emerging markets and, of course, our financial outlook. So we're looking forward to see you there, to spend some more time explaining our business to you. Thank you.
Dirk Van de Put: Thank you. I think that was the last question for today. I would like to thank you for your attention. I would like to reiterate the fact that we will be going deeper in CAGNY into the European chocolate situation and give you the details on how we're planning to tackle it. We'll also go deeper in our North American situation and, and what our plans are there, and we will cover the emerging markets and, of course, our financial outlook. So we're looking forward to see you there, to spend some more time explaining our business to you. Thank you.
Speaker #5: Thank you. I think that was the last question for today. I would like to thank you for your attention. I would like to reiterate the fact that we will be going deeper at Cagny into the European chocolate situation, and give you details on how we are planning to tackle it.
Speaker #5: We'll also go deeper into our North American situation and what our plans are there, and we’ll cover the emerging markets.
Speaker #5: And of course, our financial outlook. So we're looking to see you there, and we look forward to spending some more time explaining our business to you.
Operator: Thank you, everyone.
Luca Zaramella: Thank you, everyone.
Speaker #5: Thank you .
Speaker #1: Thank you everyone .
Shep Dunlap: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
