Coca-Cola European Partners PLC Stock

Hello, and thank you for standing by, and welcome to today's Coca-Cola Europacific Partners Half Year 2026 Results Conference Call. [Operator Instructions] I must advise you that this conference call is being recorded today. I would now like to hand the conference over to Vice President of Investor Relations and Corporate Strategy, Sarah Willett. Please go ahead, Sarah.

Thank you all for joining us today. I'm here with Damian Gammell, our CEO; and our CFO, Ed Walker; First, a reminder of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in today's release as well as the detailed cautionary statements found in reports filed with the U.K., U.S., Dutch and financial authorities. A copy of this information is available on our website at www.cocacolaep.com.

Prepared remarks will be made by Damian. We will then turn the call over to your questions. Unless otherwise stated, metrics presented today will be on a comparable and FX-neutral basis throughout volume movements, unless otherwise stated, adjust for the impact of 6 more consumption days in the half when compared to the same period last year. Following the call, a full transcript will be made available as soon as possible on our website.

You will see on the first slide of the presentation, a picture of one of the limited editions, 2 million, Champion Gold cans to celebrate our Spanish market winning the World Cup.

So on that note, I will now turn the call over to our CEO, Damian who found one of these cans selling online for EUR 20.

Thank you, Sarah. I didn't buy it. Well, thank you, and thank you all for joining. We delivered a strong first half, and I really want to start by thanking our colleagues for their focus, hard work and continued dedication to CCEP and most importantly, to our customers. Our people and our strong brand partnerships continue to drive us forward. We've seen broad-based growth across markets and categories, continued share gains, robust profit delivery and strong cash generation. our value creation strategy is working. We are creating value for our customers. We are a consistent top and bottom line compounder. We are generating significant cash, which is supporting record investment behind future growth and we are increasing our returns to shareholders.

Looking back over the past three years, we have generated EUR 4.4 billion of value for our retail customers and returned EUR 4.3 billion to shareholders through dividends and buybacks. We operate in large, attractive and growing beverage market. NARTD is a EIR 190 billion category globally and is expected to grow 3% to 4% annually through 2030. We are well positioned in the fast-growing categories and across a diverse channel and geographic footprint, including particularly attractive long-term opportunities in Southeast Asia.

Looking now at our results. The business continues to perform well. We're pleased to have delivered a strong first half with balanced top line growth across our markets continued share gains and robust profit delivery. We're executing well on innovating at pace, focusing on the categories where consumers are most engaged including Zero Sugar, Energy, Sports and Hydration. As a result, we continue to lead value creation for our customers.

We're staying disciplined on costs with our productivity mindset and efficiency programs continuing to support profit expansion, strong free cash flow and investment in our brands, supply chain, technology and our people, also enabling us to grow our shareholder returns. We have laid strong foundations through our commercial plans, our innovation pipeline our in-market execution and the ongoing development of our strategic capabilities. We are confident in reaffirming our guidance for this year and in the longer-term opportunity ahead.

Turning now to the key metrics. You can see a well-balanced performance across the business. Revenue grew strongly with great execution across our markets, positive revenue per case and strong growth in volumes, particularly in Q2 and despite Easter falling into Q1 this year. June was actually our biggest volume month ever. We also grew value share by 20 basis points, driven by gains in Europe. Our customer relationships remain a real source of competitive advantage. We continue to maintain high service levels and we're proud to remain the #1 retail value creator, which is important because creating value for our customers is central to how we will grow sustainably.

Operating profit reflects the quality of our top line as we benefited from stronger volumes as well as disciplined cost management and our ongoing productivity agenda. Cash generation remains a core strength of CCEP. We delivered strong comparable free cash flow in the first half and continue to invest behind future growth, while also returning cash to shareholders through our dividend and our share buyback program. So overall, the first half demonstrates the strength of our model. We are growing, investing, improving productivity and growing shareholder returns, all within a disciplined framework.

We delivered revenue of EUR 10.7 billion, an increase of 6.1% with volumes growing 5.6% or 2.2% on a days adjusted basis, with volume growth in both Europe and APS. Revenue per case grew 0.4% against a strong comparative of almost 4% growth in the first half of last year. Headline price increases, promotional optimization and positive mix benefits from the growth of energy and more coolers were partially offset by the growth of larger volume formats in Europe.

In addition, we also faced a headwind from the Suntory alcohol exit in APS and this is worth just over 1% of total revenue during the first half. In fact, in Australia Pacific, revenue excluding alcohol, grew a really healthy 10%. Cost of sales per unit case increased by 0.6% lower than our full year volume [indiscernible] 1.5%, and this largely reflects both a higher half 1 comparable of 3.6% last year, and with much of the absorption of the ongoing uncertain situation in the Middle East still to land in half 2.

OpEx as a percentage of revenue was 21.4% and an improvement of around 40 basis points, supported by savings on discretionary spend and continued productivity gains. The combination of these factors drove operating profit of EUR 1.5 billion, up 8.1%, with an operating margin of 13.8%, up around 30 basis points on last year. Diluted earnings per share of [indiscernible] was up 10.6% and supported by the share buyback with around EUR 600 million of the full year one being now completed.

And finally, free cash flow of EUR 435 million was slightly ahead of last year. This was after investing in key projects, including more coolers, a new Warfield line for Power in Australia, new can fillers in Sweden and the development of our exciting greenfield site Manila, which is on schedule to begin production next year. We do remain on track to deliver comparable free cash flow of at least EUR 1.7 billion for the year.

Our performance in the first half and a solid start to the second reinforces our confidence in the outlook for the full year, notwithstanding 6 fewer trading days in the second half. So today, we're reaffirming all elements of our full year '26 guidance. And our '26 guidance is in line with our midterm objectives with a quick reminder of those here. Our performance and the continued delivery of these midterm objectives come back to the execution of our focused and consistent strategy captured in these core priorities.

Firstly, we're broadening our total portfolio investing behind faster-growing categories and driving innovation across both established and emerging brands. We bring these brands to life in market with great execution, whether that's through impactful on shelf, given [indiscernible] point of interruption, cooler placements or recent major activations such as the FIFA World Cup to differentiate ourselves in the marketplace. Enhancement of our revenue and margin growth management investment in commercial capabilities and productivity improvements ensure we remain competitive.

Our investments in the Philippines and Indonesia represent significant long-term opportunities to accelerate growth, and we're encouraged by the progress we're making in both markets. And we're unlocking growth through technology and AI. These investments are helping us to generate new growth opportunities across the business, improve decision-making, enhance customer service and increase our manufacturing efficiency.

Our focus on these priorities is strengthening our business today and creating the foundations for growth and value creation for many years to come, and of course, all done sustainably. Briefly on that, we recently updated our sustainability goals to include the Philippines, something we explored in our recent ESG webinar and available for replay on our website. So how are we getting on more broadly against these priorities.

Our portfolio strategy is working. We're continuing to invest in the core whilst broadening our participation across faster-growing categories and occasions, including sports, energies and [indiscernible] where we're seeing strong momentum, which I'll come back to shortly. We've seen a meaningful contribution to our growth from some great innovation in the first half. On our Coke trademark across original tastes and Zeros, our new cherry variants, including Cherry flowed and GB performed well. We continue to make good progress with small more premium packs and the new 500 mL super cans are proving to be a great success, especially with younger consumers. So watch this space for more to come.

And we welcome the return to growth for Diet Coke in GB, supported by the addition of Cherry and the collaboration with the Devil Wears Prada. Our Flavors family has seen lots of exciting new introductions from Royal Grape and Leechi in the Philippines, the fantastic [indiscernible] mini Indonesia and the [indiscernible] new visual identity for Fanta with Xbox gaming graphics. We're strengthening our presence in sports hydration with volumes up 12% and queries continue to drive strong growth in Iberia, while [indiscernible] grew double digit, supported by the FIFA activation. This brand has also been recently introduced to Indonesia where the sports category is already half the size of sparkling.

Energy continues to outperform with volumes up an incredible 19%. Monster growth is running at roughly twice the category rate. Our share was up 230 basis points, supported by innovations such as Viking Berry and strong activation around our motor sport partnerships with Oscar Piastry now featuring on the cans of Monster Green.

Water is growing well, particularly in GB with smart water and in the Philippines with Wilkins. And we've made fantastic progress in coffee in Australia, where Grinders is now the #1 coffee bean brand in retail with sales of over AUD 100 million. The common theme here is choice, more brands, more packs, more flavors and more occasions focused on faster-growing categories. That's helping us recruit consumers, increase frequency and capture a greater share of the beverage spend.

As I mentioned earlier, we've seen great momentum in the growth of Zero everywhere. Whether in Coke Trademark, flavors with SPRITE and Fanta, in Hydration or in Energy. Both Coke Zero caffeine in its eye-catching, cap-free eye-catching new black and gold packaging and Zero Chill SPRITE, with its refreshing blast of mint have delivered beyond our expectations with SPRITE overall grown by 6%, supported by the fantastic SPRITE and Spicy campaign.

We've extended our range of Zero flavors in Fanta and are seeing good growth in Zero sugar sports through [indiscernible] Aquarius and in Energy where the month's Ultra range was up over 50%. The Overall, Zero sugar volumes increased by 10%, and we expect strong growth going forward with innovation offering more choice for consumers as they increasingly seek out healthier but exciting and great tasting options.

Execution is one of our most durable competitive advantages. And in half 1, we turned brand strength and innovation into visible, measurable marketplace impact. One example is our cooler rollout plan, which is running well ahead. We've added more than 80,000 coolers this year, an increase of 5%, more than 10% since last year when we began our accelerated program to expand coal availability and grow instant consumption, which supports mix.

We're continuing to win with customers and listings across markets, including Smart Water and [indiscernible] in selected markets, Domino's was a significant recent win in Australia with the GB team winning Parkdean Resorts, Papa John's and [ Legion Ide ]. This expands our coverage of English membership grounds to 80% and makes Ed, our CFO, [indiscernible] very happy. And we've seen a terrific win for the whole system with Marriott International including over 600 hotels in our markets and that will start rolling out during half 2.

Beyond that, execution on our packaging collection progress continued. DRS has landed well in Portugal, we continue to prepare for GB next year, and we launched a cross-border recycling program across the Pacific Islands, all contributing to our decarbonization journey. And finally, we're bringing our brand to life through stronger activation, as you can see here on the Fanta and Xbox and of course, through FIFA World Cup, which I'm keen to touch on next.

World Cup 2026 has been our biggest activation program ever, providing a great example of how we work with the Coca-Cola company combining world-class assets with exceptional local execution at scale, to create value for our customers and excitement for our consumers. We delivered more than 500,000 displays with our field teams continuing to build momentum as the tournament progressed. All of our top European home customers executed a campaign covering more than 47,000 outlets. We activated exclusive Panini sticker On-pack promotions with 163 million packs and produced more than 135 million team and player cans.

Importantly, it just wasn't about brand awareness. The activation support of transactions with more than 1.3 million FIFA items awarded to shoppers through the purchase of our brands. On to competitiveness. Sharpening competitiveness is not simply a cost agenda. It is about building a faster [indiscernible] that is more efficient and more effective in serving our customers and consumers and one that can [indiscernible] growing profitably.

One important lever is revenue and margin growth management. We are continuing to use sharper insights, better promotional mechanics and stronger pricing tools to balance value for consumers with profitable growth for our customers in CCEP. That is particularly important in an environment where many consumers remain focused on value.

Promotions are a good example. They are not only about headline price, but as examples here demonstrate about great promotional mechanics, helping to drive higher incidents, whether that's through free meals and QSR, gifts with purchase or price led campaigns for Fuze Tea Coke Zero. At the same time, we are building more scalable capabilities across the business, expanding integrated shared services with more than 1,500 colleagues, including now over 250 in Manila. This is all part of our broader productivity mindset. We are improving how we work, simplifying processes as we leverage AI, reducing OpEx and reinvesting behind the capabilities at [indiscernible] across both commercial and our supply chain.

Our markets in Southeast Asia are our fastest-growing within CCEP as you saw earlier. In Indonesia, we made solid progress during the first half of this year, with Sparkling continue to grow ahead of the total category. Our new launches like SPRITE, nippy Mint, Coke Zero Vanilla and Powerade are performing well and have contributed significantly to growth in Q2, following a great festive period. This has been supported by a new route-to-market model which is helping us strengthen execution and improve category participation with distribution partners.

In the Philippines, we've continued to see strong momentum. Our Coke Zero campaign focused around [ all else syrup ] or all at deliciousness, supported double-digit volume growth, and we've continued to see good momentum at Wilkins, our water brand, which is benefiting from new listings. We're also investing for future demand.

Construction of our new facility remains on track for 2027, and this will provide additional capacity to support long-term profitable growth in the Philippines with margins now approaching our 10% target. Taken together, Indonesia and the Philippines are becoming a scalable Southeast Asia growth engine for CCEP, combining strong category growth, improving execution innovation momentum and growing profitability.

Now just to talk a little bit to AI and tech. Our approach to AI is clear. We are focused on a key number of strategic opportunities across the business but we are deliberately centered around growth. By way of a few examples, it is providing enhanced analytics to optimize promotional pricing levels is supporting our insights team to analyze data to drive swifter commercial decisions. It's cleaning millions of pieces of manufacturing data in days rather than years, and it's helping key account managers provide more effectively prepare more effectively for customer conversations and is starting to enhance productivity as we leverage digital twins in our supply chain.

So what gives me confidence is that what we're seeing -- while we're seeing good progress against all our strategic priorities, we will keep coming back to demonstrate how we are strengthening our business today and creating foundations for tomorrow. We know, however, that we've got more to do. We continue to broaden our portfolio, especially in Zero, bringing even more magic to Coke Original taste and driving more innovation with clinic-ed options coming from our brand partners. In Southeast Asia, we are encouraged by the early progress in Indonesia and the continued strength of the Philippines.

Our focus is now to sustain that momentum and scale it into a long-term growth engine for CCEP. All of this is continue to execute across our markets each and every day whilst adopting even faster, leverage that and tech across our business. So as you've seen today, we're continuing to build on the consistent track record of delivery over the past 10 years. We've created significant value for customers, consumers and shareholders and we believe the opportunity ahead remains just as compelling.

We are growing across attractive categories and markets, broadening our portfolio, winning through execution, sharpening our competitiveness scaling Southeast Asia and unlocking new growth through data, technology and AI. The strength of our first half performance demonstrates the resilience of our business and the consistency of our growth model. While we have several key months ago and 6 less trading days in Q4, the second half has started well, giving us confidence in our full year outlook and our ability to deliver on our medium-term objectives. We are winning today and we are creating an even stronger platform for tomorrow.

Thank you, everybody. And Ed and I would now be very happy to take your questions as I hand the call back over to you, Mel.

[Operator Instructions] Our first question comes from the line of Edward Mundy from Jefferies.

Damian, Ed and Sarah, look, I appreciate it's a little bit too early to talk about 2027 guidance, but I'd love to pick your brains as to how you're thinking philosophically about in next year. On the one hand, you're going to be lapping 2 really good summers, got FIFA, you've got this very strong innovation cycle that we've just been through. But on the other hand, broadening your portfolio, you're taking share, flatten waking up and AI is moving from a productivity tool to a growth engine. What are the 2 or 3 things that you're really excited about, Damian, as you go into 2027?

Yes. Thanks, Ed. I mean, we'll talk later in the year with more specificity around '27. But Clearly, we're excited about the second half of this year, just to maybe bring it back to '26. As I said, the second half of this year started well. We've continued to see good weather across most of our markets. And we've got a lot of good campaigns coming, whether that's around the bonus Lega, EPL, our new icon, look and feel for Coke Zero. We're only at the beginning with Coke Zero Zero, super cans are new. So a lot of the innovation that we've brought to market in '26, really, we'll see the full year benefit of that in '27. So that definitely gives me some excitement and confidence.

I think the second point I'd make Ed, is that clearly, when we were preparing for FIFA, we were working very closely with the Coca-Cola Company to have a really exciting asset for the same period next year, and I'm really excited about that. Obviously, for various reasons, I can't get into more detail with it. But as you appreciate, we have been working hard to make sure we bring a similar level of excitement on store inventory to our consumers for 2027.

You're right about Asia. I think we start to see that being a material player in our growth algorithm. It's great to see Indonesia performing. And again, a lot of the innovation we've brought this year will continue into 2027.

And Yes. To your point around AI and tech, certainly, we will see net revenue per case playing a bigger part of our story in the second half of this year. We clearly continue to look at pricing opportunities as we exit which again will give us a bit of momentum into 2027. So excited about the second half of this year and looking forward to an even more exciting 2027. Also, some of the foundational work we've been doing around cooler placements, some of those customer wins. I mean, they remain in our base into '27, and that also supports our growth objective. Thanks, Ed.

Our next question comes from the line of Matthew Ford BNP Paribas.

The first one is just to pick up on something you just mentioned there, Damian, on the revenue per case kind of evolution -- particularly if we focus just on the Europe performance, Q2, I think, plus 1.3% revenue per unit case kind of in line with what we saw in Q1 and obviously, Q1 was impacted to a degree by the earlier time of Easter. Just how much of the sort of slightly softer revenue per case is is reflecting sort of the tougher consumer environment and the focus on affordability and large packs? Or is there something else in there? And should we expect the kind of European revenue per unit case to also sequentially improve, clearly, in [indiscernible], we have will fully cycle the beam some try impact there. But specifically on Europe, what's your thoughts into the second half?

And then very, very quickly, just if I could follow up on the Philippines -- we're cycling, I think as we go into Q3, the quite devastating typhoons you saw in July and August last year. So any update on how July and potentially the first couple of days of August have trended in the Philippines?

Yes. Thanks, Mark. Maybe I'll deal with the second part of your question and then hand back to Ed for your questions [indiscernible] case. Yes. As I said, we're pleased with the way half 2 started across CCEP, including the Philippines. So far, we haven't seen similar weather that we had to deal with last year. So that will definitely help as we look at Q3. But generally, the momentum we saw in June is continuing across our business. So that gives us, yes, a lot of excitement for a solid Q3.

And I'll hand back to Ed on the NSP case question, Ed.

Yes. Thanks, Mark. So on the revenue per case and looking specifically at Europe, so yes, absolutely, as you said, we grew 1.4% per case in the quarter, and that was quite nicely balanced between rate and mix. I think one thing we need to remember is that last year, for the same time period of Q2 2025, we grew 4.2% per case. So we're cycling a very strong revenue per case growth from the previous year.

And as we look at the year as a whole, I think evening out the impact between different quarters, we still expect a good balance between volume growth and revenue per case growth. I think in Europe specifically, if you look at Q2, so we continue to see healthy brand mix coming through. We did have a bit more adversity in pack mix, but that's really as a result of success of a lot of the activation we did with promotions and particularly around FIFA. So that's probably Q2 specifically.

And then when we look at the rate, as I said, when we look at the year as a whole, we think that will be fairly balanced. We don't see any reduction in our ability to take price in our markets. And as always, as we've talked about before, these pricing decisions within quarter are quite dynamic and are always influenced by the period that we're tackling. We continue to focus on affordability as we talked about last year and making sure we have the right packs at the right price for all of our consumers, but also that we give consumers great experiences to either our packs through our innovation or some of the great activation we saw around FIFA like Panini, as Damian mentioned earlier.

Yes. And I just think to build on that, I mean, on our last call, we've been very explicit about trying to balance pricing with value add because we think, obviously, the brands that we have bring a different level of excitement to our consumers. So what you'll see in Q2 and into Q3, a lot of our on-floor activation, particularly in retail is to win, to collect, to get access to tickets. And we think that's important, while it offers value, it also brings excitement. And we think with the brands that we have, that's what consumers and indeed customers are looking for.

So we'll continue to look at a balance of affordability to price value. We've got a lot of premium plays out there. A lot of our innovation is more in the premium space, super cans, Coke Zero Zero, and then we'll shift some more of those promotional funds back into value-add. We see that responding really well. And no surprise, the gold can for the Spanish team has been a huge hit in Iberia. So elements like that, we think are something that brands like Coke can do better than anybody else, and we'll keep leveraging them.

Our next question comes from the line of Bonnie Herzog Goldman Sachs.

I had a question on your volumes. I guess I was hoping to get a little more color on your volumes in the quarter? And maybe how they trended relative to your internal expectations? Damian, you mentioned both the World Cup and favorable weather were two drivers of strength. So hoping maybe you could give us a sense of the lift you saw from this? And maybe any other call offs that surprised you from your perspective.

Also, your guidance implies a decent deceleration of growth in the back half. So I guess I'm trying to understand how much would possibly pull forward into Q2 versus conservatism on your part? And finally, they just expected phasing of growth between Q3 and Q4?

Yes. Thanks, Bonnie. I can say there was 0 pull forward or impact on Q3. So really healthy volume growth across the quarter. I would say it was a quarter where we delivered growth from a geographic perspective, very balanced. From a channel perspective, we were pleased and also, as Ed mentioned, from a pipe perspective. So it was broad across brands and packages. We came in with a lot of momentum into the third quarter. As I said, it started off well for us.

So zero impact on the growth from Q2 into Q3, which is great. In fact, probably some of the people who are working the hardest at CCEP are our supply chain colleagues. As we continue to meet that increased demand coming out of the second half and rebuild inventories. So overall, very pleased. I would say, obviously, FIFA is a call out just in terms of scale and impact. I would say some of the new innovations are doing better than we expected. So Coke Zero Zero -- I think the super counter surprised us, really connecting with a different user, and I think that's working really well.

And obviously, we talked to some of the innovation in Asia, but particularly powerade in Indonesia surprised us to the upside. So that's great. So quite broad, which is exciting, quite sustainable into Q3, Q4, and as I mentioned, to Ed's point into next year. You could call us conservative. I mean, Ed and I looked at our numbers for the first half of the year reflected on a year to go. There's still 5 months to go. And clearly, we'll be able to update everybody in November and how we see the full year. But at this stage, given the volatility that we've seen, particularly on the cost side, it's great to be able to reaffirm what was pretty good guidance anyway, and that gives us a lot of excitement for the second half.

Our next question comes from the line of Simon Hales, Citi.

David, I wonder if you could just sort of pick your brains a little bit further on your comments around the H2 guidance and potentially some of perhaps the prudence you're building in there. I'm just still trying to square the circle because from what you said today, clearly, Q3 has started strongly, momentum is very good. It's obviously through June. That's continued into July and perhaps early August. We've got perhaps lower romo coming in Europe in H2, generally, as you said, higher revenue per case, further cost efficiencies coming through. and yet overall comparable EBIT growth is expected to slow to probably around 6% and change in H2 to meet your guidance.

You just flagged there your worries perhaps around some of the cost volatility we're seeing. Are you really sort of being pretty conservative because of the higher COGS per case we're seeing in the second half? And is that really driven by what you're seeing out of the Middle East in particular. I'm just trying to get a bit more of a flavor as to what's driving that potential current services on your part?

Yes. I mean we look at the year in total, Simon. I mean I know everybody gets excited by quarters and the half year outlook when you take the first half and you deduct it from our guidance. I mean you guys do the numbers as well as, if not better than us. I suppose really just comes down to. We still have 5 big months. We still got to get through what is a really good summer for us in Europe and we're excited about that. And we move into spring, summer in our Australia, New Zealand businesses. So it more reflects the kind of time frame that we still have 5 what we hope will be great months to go. And that was it really.

I mean there's nothing specific. When we look at our hedging, we're in a good place. We look at our pricing. We're in a good place. We would like to see a little bit more NSR per case progression in half 2 we're clearly working on that with our commercial teams. From a listings perspective, we're in good shape. Yes, so there's a lot to be positive about. We just felt that with 5 months to go sticking to our guidance is probably the best decision at the moment. And then obviously, should that change, we'll update it as we go through the year anyway as normal. So yes, nothing specific, more really that we felt we're just halfway through the game. Yes, maybe we are a little bit conservative, but that's Yes. Maybe that's our way a little bit. I don't know, Ed, do you want to comment?

Well, maybe just one point to add. We have to remember, of course, that there were more selling days in the first half and the second half. So when we look at our reported revenue and our reported profit, they reflect that. So obviously, that means a few less selling days in the second half. But that's all as per our plan and how we anticipated the year would roll out at the beginning of the year. I think on the Middle East, as you mentioned that, I mean, we're in a good place in terms of our coverage for the year. But the majority of the costs will fall in the second half. That's all built into our guidance.

But obviously, given the timing of that and given we're almost -- we're always a little bit more hedged in the near term than the midterm, we will see more of that cost in the second half. And of course, the Middle East itself is still an open item in terms of how it really affects all of us for the rest of the year. So just a couple of points there that might help, Simon.

Our next question comes from the line of Andrea Pistacchi Bank of America.

I have a question on Indonesia, please, which delivered a strong quarter albeit against a pretty easy comparison base. Is there anything in sort of the performance of this quarter and the previous ones that really is maybe increasing your confidence that the turnaround is gaining traction beyond the context? And do you think now Indonesia is in a situation where it can start sustaining positive volume growth?

Yes. Great question. We're really excited about Indonesia for the near and long term, obviously, just given some of the macros that we all know about. I think when we look at our business, we started the year off with a great festive, that's continued into Q2. A couple of drivers of that. One is structural. I mean we've spent some time reorganizing our route to market and moving to a more efficient distributor model. We firmly believe that's a driver of growth for the long term. We've brought more innovation, whether it's on the Mint side with SPRITE or on Powerade, that's definitely driving growth.

Our underlying performance on Sparkling is actually better. So when you look at the consolidated number within that, there's still a little bit of weakness on tea. And that's something that we need to deal with as we get through the second half of this year. But what that really shows is where we've been focused, which is in our sparkling portfolio, that's continued to go from strength to strength by quarter.

So Yes. A lot of moving parts in endo. So I think while we're super excited, we're very happy with the route-to-market change. I'm particularly pleased for our team in Endo. I mean, they've been working through a lot of change, it's great for them to see the positives, particularly on Sparkling month after month, quarter after quarter. So we expect that to continue to -- through half 2 and then into 2027. So obviously, our objective for that business that it does become a consistent driver of revenue volume for CCEP. We're starting to see that this year. And clearly, we can update as we get into next year, yes, but definitely too early to talk about success, I would say it's great to talk about progress, and that's where we are at the moment.

Can I squeeze in, please? A very quick follow-up on how the supply chain has coped with maybe the increased rain because of the incremental demand because of the other weather. Has there been any pressure on the cost base, maybe logistics or production? Or have you coped with that normally?

Yes, I'd say the team, I mentioned it earlier and a big call out to all our colleagues in customer service and supply chain we've managed it really well. I mean, we've had to make some, I would say, short-term tactical decisions about prioritizing certain SKUs. We came into the summer with reasonably good inventories. Our customers usually have good inventory. So that buffer certainly helps us to manage the uplift we've seen, particularly in June and into July. So yes, not would have pressure. And I would say a lot of hard work, but nothing significantly impacting our cost base or anything like that. It's been really good to see that the team and our factories can respond to that uplift.

Our next question comes from the line of Chris Carey, Wells Fargo Securities.

I wanted to follow up on confidence levels around using pricing as a lever. Clearly coming into 2026, there was a key strategy across the Coca-Cola system to drive improved a more balanced top line growth with volume. You've talked about in this call. providing consumers with the appropriate value and price points.

But as we look at 2027, it certainly does seem like inflation will be higher than it is in 2026 based on what we can see today with acceleration in the back half. So how does this strategy in 2026 evolve into 2027? Can the pricing line continue to be as robust for you when you need it most, when inflation is rising? Or is there a step change in the thought process about how to manage these inflationary backdrop, say, relative to 2022 and 2023. And I just wonder if you could maybe one bubble down and talk about how you would view this in your Europe versus APS businesses as well.

[indiscernible] when we look at the percentage of revenues relative to retail. So several placements on give us access to much more last consumer environment [indiscernible]. So I think it's quite different to a lot of [indiscernible] Businesses in CPG. We're also more diversified than ever across categories and packs. So again, when we look at pricing, it's a very, very segmented strategy. And I think that gives us confidence that pricing will remain part of our mix story through '26 and into 2027. It's a similar environment in APS, albeit I would say we're focused on affordability, as you'd expect, more in markets like Indonesia and Philippines where we just know out-of-pocket spends under more pressure. But ultimately, we feel with that diversity and a segmented approach, we're in good shape for this year or next year.

I don't know, Ed, do you want to...

Yes, I think you're absolutely right. I mean, if you look back over our history, we've we've managed successfully, I think, periods of low inflation and periods of high inflation. It will be a balanced approach. As you said, Chris, we're very conscious of the need for volume growth across the business and revenue per case growth.

I think one of the strong things about CCEP is we have many levers to that pricing, whether it's the headline price, a lot of opportunity always to make our promotions work harder and be more efficient. And then as you look across the portfolio, many different packs and brands, which really lends ourselves to being able to take that very segmented approach. And I think '27 will be no different from any of the other years. It will be a very carefully considered approach, and we'll look at what's the right thing from a consumer pricing perspective from affordability, what's the right thing for the category from a customer perspective and of course, what do we need to do to cover cost in our business, but also to invest in the future. So I think we will see the same type of trends and the same type of activities, as we've seen in previous years of maybe slightly higher inflation.

I think we're also leveraging innovation as well. I think a lot of the innovation you'll see coming through smaller pack sizes, generating a higher revenue per case commanding a bit more of a premium. And as more of that to come as we look at brands like BODYARMOR, what we do with Powerade, I talked about earlier. Obviously, energy is mainly single-serve drives a nice revenue per case.

So to Ed's point, I think we have a lot of different levers beyond that kind of headline price element, but there will be some headline price as well. But the combination of all of those gives us confidence that we can maintain a quality top line growth, which for us is really a little bit of price, mix and volume. And also sustained margin expansion on the P&L, which we're obviously very focused on.

Our next question comes from the line of Sanjeet Aujla, UBS.

Damien, I just wanted to dig into your share trends across Europe. I think we started the year with some weaker momentum, particularly in Germany and France. How have you seen your competitiveness develop through the course of the half year period. And specifically on the Away from Home channel, I think volumes were only up 0.5%. Are there any parts of Europe where performance is lagging. I think there was a bit of momentum build last year, but has that faded a little bit this year? Or how would you assess your Away from Home performance in Q2?

Thanks, Sanjeet. So our share has improved, particularly in Europe as the years progress -- we're actually seeing a slightly better volume share than value share and that comes back to some of the points Ed talked about. We've seen some of our large PET initiatives pay off particularly Diet Coke. So I want to -- I'm a Diet Coke fan, so I want to call out Diet Coke where we've seen that brand return to growth in GD. So our volume share is improving and sold value share in Europe.

And as you see, overall, in NARTD, we gained share. In terms of Away from Home, I would say it's pretty consistent with last year. Obviously, revenue is doing a little bit better than volume. Across all of our markets, it's pretty consistent. Obviously, it's picked up a bit as the weather kicked in, particularly in June and into July. Yes, so nothing structural there. Obviously, it continues to be a channel where we've got to drive more availability.

So our coolers are a big part of our Away-from-home strategy. And we've got to manage clearly, particularly down the trade you'll see a bit more meal deals. You've seen that from some of our big customers, a bit more value for McDonald's. And I think that just reflects what Ed talked to that while we see the business being very resilient. We are conscious that some consumers still respond more to value, and that's also true in Away from Home. Yes, but 2 years now where we've seen growth in Away from Home, and we're really happy with that.

Our next question comes from the line of Richard Withagen. Kepler Cheuvreux.

You mentioned promotions and promo spending a few times on the call today. And I think also on previous calls, you mentioned it. Can you perhaps quantify promo spending? Is there more optimization potential? And what else in revenue and margin growth management are you focusing on to optimize?

There's always opportunity when I speak to my [indiscernible] on the commercial team. It's a big part of money. So I do think optimization has really improved. I mean we've done some good work using technology. We clearly understand what promos don't create value for us or our customers, what promos drive better household penetration. So we will continue with that.

And I think beyond promo optimization, and you'll probably see that a little bit in some of our markets. Some of the promo depth is increasing. So we see similar promos but at a slightly higher promotional price. Clearly, to Ed's point earlier, that will support some of the NSR growth through to the second half of the year.

Beyond that, I mean, I think as I talked to earlier, our innovation plays a good role. It's mainly single serve, it's mainly more premium [indiscernible] large PET and a lot of it's on the go, which commands a higher price. And then within retail, we see an opportunity, particularly -- I'm just back from a visit to the U.S. with Ed. You can really see how they've taken many comes, small PET even further than we have in Europe. I mean, that's been a good part of our story. But when you visit markets like that, you can see how that can be even a bigger part of our story in Europe and in Australia. So I think packaging, pack mix, pack innovation will be a bigger part of our MGM story going forward.

And then clearly, categories. So when we look at Sports, particularly Powerade and Aquarius, they drive a much better mix for us. So -- and again, just referencing my North American trip, when you stand in front of the fixture in the U.S. and also, I would say, in Australia, to our team's credit in Australia. They've just done a much bigger job on making Powerade and that whole sports category relevant. We see the growth in that in Europe, but there's a long way to go. So a combination of that price promo optimization pack mix optimization and better category leverage. And I think that gives us confidence, not just for '27, but over the next number of years in Europe and in Australia and New Zealand.

Our next question comes from the line of Nadine Sarwat Benstein.

One for me, please. That 20,000 new coolers added is a pretty incredible number, and you referenced it quite a lot in a helpful manner in your prepared remarks. Can you give us a sense of how this incremental cooler capacity is distributed across or geographies or channels? And just help us understand the ROI or incremental sales or positive mix generated by an investment like that in whatever way in terms of quantifying that, that you can?

Thanks, Nadine. Great question. So actually, it's 80,000 coolers that we've done this year, and that was building on significant increase as well last year. So yes, we're very pleased with our progress on cooler placements. I would say it's fairly evenly balanced across our markets and actually pretty evenly balanced across channels, both in the home channel and Away from Home. We found lots more opportunities to place coolers, both Coke coolers and Monster coolers.

From a finance perspective, there are some of the best investments we like to make. Every cooler is different depending on where you place it, but you can be looking at returns or certainly within a couple of years for a well-placed cooler. We give quite specific guidance to our sales teams in terms of what type of throughput we need to be seeing in order to generate the return. And then in fact, throughput is delivered, then you can be very comfortable with the return.

And of course, we're starting to see more and more the use of connect coolers, and that gives us great feedback on the number of purchases what's the right distribution of products and brands with the right rates of sale that we should be seeing through those coolers. So again, another area where technology and AI is really giving us fantastic insight to make sure we put the right coolers at the right size in the right locations. But certainly, from a finance perspective, very happy with the returns we receive from our cold drink placements.

Understood. And one follow-up on that actually. It clearly is meeting the consumer at a place where they want something cold, want something convenience. What does that say about underlying consumer dynamics today, single-serve versus multipacks? And how are you expecting that to evolve over the coming years?

Yes. I mean I think our single-serve business, particularly as we bring more flavor and innovation is really robust, and it's something that we know that our category is an impulse category, right? So it's a huge benefit that if you put it in the right place and it's cold, it gets old, and that's been through for a long, long time in our business. It's also an area where you can get price elasticity.

So I think people realize and accept that for that convenience and for that immediate cold product, they'll pay a little bit more, which is good for us and for our customer. And typically, when you look at our beverages across our markets, while we have taken pricing, I mean, you can get a cold coke in most of our markets for around EUR 1, $1.50. So while we do talk about pricing, the absolute spend to enjoy one of our products, I would argue, is always still very reasonable.

Let's put it that way. And then on top of that, you've got categories like Energy and Sports that command a premium. And candidly, our distribution, particularly on Sports and Away from Home and Cold is very low. So that's something we've got to find a better way to unlock that opportunity.

I think it also says quite a bit about the customer and the customer sees the value in the category overall. And then it's a great value creator from them from an outlook perspective. So we see increasing signs of the customer wants to place more and more equipment and then give more and more space to soft drinks, which I think is a great thing for us, obviously.

Our next question comes from the line of Mitch Collett, Deutsche Bank.

I enjoyed your third slide, the new one. And there was a bit on there about Kira, your Agentic AI application. You say that it gave you deeper branded insights and faster market decisions. So I just wondered if you could give us any examples of those insights and decisions? And how do you expect that tool to develop and contribute to the business going forward?

Yes. Thanks, Mitch. I mean we have got a wealth of information as a system. I think that's the starting point, whether it's from our customers, from our own structured research with the Coca-Cola Company and Monster, EPOS data. I mean we really have a lot of information. Our challenge was trying to put that in a place where we could access it and use different sources to make better decisions. And this is, I think, a challenge of many companies. So Kira really is our first big attempt to have an AI agent that sits above a lot of those sources, whether it's Nielsen, Kantar, EPOS information, brand information from the Coca-Cola Company.

And it is giving a better understanding of how consumers respond to some of our initiatives, whether that's promo or new pack innovation. And clearly, then that steers the next decision about where we prioritize resource. So it's really allowing our commercial teams to ask the right question, get a very quick answer and then bring that to our customers to shape whether it's space in a cooler, better promo pricing or better innovation as we go forward.

So I think we're at the beginning of that. I mean, we've also done some work with McKinsey on trying to look at how AI consider both even more information and really consolidating a great data set from the Coca-Cola Company with what we have. And I think that's where Kira kind of sits in the middle of that. So early days, but it's certainly amazing to see how -- what took weeks to try and get some correlation between Nielsen shopper panel or customer data is now happening a lot quicker yes. So super exciting.

Our next question comes from the line of Eric Serotta, Morgan Stanley.

Two quick ones. First, Damian, back in Manila, you talked about the potential for the potential upside for improving kind of core Sparkling volumes in Europe. Looks like you made some progress in terms of Diet Coke and Light in a couple of markets. Original taste seemed a little on the soft side. Even taking sort of a step back from the quarter-to-quarter volatility -- could you talk about your progress and your confidence in achieving that core sparkling volume improvement in Europe since we heard from this a little over a year ago.

And then a quick one for Ed. Usually around this time, you're around midyear, your you're typically about 50% hedged on commodities for the following year where do you guys stand today? Or are you a little bit less because of maybe elevated prices earlier in the year? Or were there some opportunities given the forward curves on commodities?

Yes. Thanks, Eric. Good memory back to our Manila meeting. Yes. So we have seen sparkling volumes grow in Europe, and I think that's been great. It's been led by Zeroe, which are up over 10%. And you're absolutely right. The brand that hasn't grown volume has really been Coke Classic, and we've talked about that. I think there's a couple of factors at play. Obviously, people are enjoying great tasting Zero Sugar options, particularly Coke Zero, but now Diet Coke, which is great. So on a consolidated level, we can grow our Coke trademark franchise and volume. And that for us is really important.

Coke Classic is still the best tasting brand. So we still see that performing, and it's still growing revenue. So while on a volume level, it's off a little bit. It is growing revenue. And I think that will continue as we have, as I mentioned earlier, mini cans, probably smaller portions around our classic variance, both Coke and Fanta and clearly a better Zero proposition. So the category is growing. It will be led by Zeroes. We see that gaining momentum both in energy and in soft drinks. And as we've reformulated we're now really in a solid position to take that forward.

All the fair to say the Coke Classic when you look at it in the shorter period, we did have the sugar tax increase in France. And clearly, that was mainly on Classic, and that obviously impacts volume in the short term. but we generally cycle out of that through the year. Yes. But overall, great to see the category, Sparkling category and growth and great to see [indiscernible].

I'll just pass the call to Ed on your second question.

Yes. Thank you, Eric. So yes, as you say, we aim to be 80% covered by the time we start in the coming year. We don't give specific guidance at this stage in terms of the year coming at where we are at the half year point. But we aim to build it up fairly evenly over the year. So as you say, 50% is probably a reasonable approximation. We haven't delayed any of our hedging activity this year despite the Middle East because obviously, we try to avoid or we do avoid speculation. And we do the hedging to give us certainty in terms of far as possible on costs for the coming year.

Although the forwards are higher, I think what we have seen through the Middle East crisis is quite a lot more volatility on individual commodity prices. So we have locked in what I think are some good competitive rates for next year already, but we haven't overall delayed our hedging program just as a result of the Middle East.

Our next question comes from the line of Lauren Lieberman, Barkleys.

I wanted to just talk for a second about the more customers element of your strategic priorities. There were a couple of calls out in the release, but it's interesting to think about the range of large customers that would be directly linked to KO level conversations like Marriott versus things that are more specific to your markets. So I was curious if you could talk a little bit about that process and how much of this more customers do you think of it as being CCEP specific things that are driven by your ability to cover more accounts with the productivity you're finding in your sales force versus big global strategic partnerships?

Lauren, it's mainly within CCEP's control and mandate. We won a lot of new business, both small and large. We won businesses in the event space. I talked about football. We won the biggest local chain in Spain in terms of pizza and food to go, Domino in Australia. So clearly, we leverage any global relationship we can get with the Coca-Cola Company, but the majority of the outlets are very local. And we're very focused on that.

You see a lot of multiple buying groups, particularly in Europe and Australia, where they have 10 to 12 outlets, and they're exciting. Obviously, a win like Marriott lifts all boats. So when the Coca-Cola company shared that news, it was fantastic for us, 600 hotels. And I think globally, when you look at our global franchise partners through the Coca-Cola Company are a strong already. So I would say the upside for us, we've always welcomed a gift from Atlanta, if they can land one of the big global ones, but really for us, it's in our control, and it's mainly local chains. Our share in away-from-home is quite high relative to retail. But that doesn't mean we don't have opportunities, and we will keep picking on new customers and new business as we go through this year.

Our next question comes from the line of Charlie Higgs, Rothchild and Co Redburn.

Yes. Damian, Ed, I hope you're well. And also I want to say happy birthday to see CCEP for 10 years in the quarter. and I hope it was a good party. And on that note, I was wondering, if we look back over the last 10 years in Europe specifically, there's been a lot of volatility at the macro level, sugar taxes and whatnot. And yet CCEP Europe is still delivered very resilient 4% or so organic sales growth per annum.

And then it seems like a lot of the themes in the presentation today is about really dialing up the execution at the local level with more cooler placements, more customers, bigger, stronger innovations. So how should we think about the growth set up for Europe going forward? And I guess where I'm coming from is why isn't the European guidance more like 3% to 4% over the medium term rather than the 2% to 3%?

Thanks, Charlie. Well, thank you for the birthday wishes. We we're all very busy during the summer. We had a little bit of a party. Yes. I mean Europe, since we created CCEP has been a massive value creator compounding year-on-year, and we see that continuing. I mean, obviously, we look at guidance on the midterm. And as we look at the group guidance around that 4% revenue, to your point, that implies Europe around [ 2% to 3%]. Yes. And we think on a steady state, that's a good number. If we can do better than that, obviously, we will -- in that, we have factored in that transition from Classic to more Zero, that's accelerating, and we see that we're benefiting from that this year.

Yes, and we'll review guidance as we get more visibility on innovation with the Coca-Cola Company and Monster for Europe as we go into 2027. But I think overall, that range of 2% to 3% is a good number leads to the 4% for the group. Obviously, your next question would be if we did change Europe, would we change the group. And clearly, we want to manage all that within our current framework. But yes, happy to stick to the 2% to 3% for Europe. Yes. Thanks, Charlie.

Our next question comes from the line of Robert Ottenstein Evercore ISI.

Great. Damian, at this point, you've managed through a number of the FIFA World Cup. And so I was wondering if you could reflect on how the execution, the stuff that we don't see, but the kind of the nuts and bolts that goes into success has changed over prior World Cups, whether it's coordination with the Coca-Cola company dealing with more social media now, more agility, changing things on the run. Just some of the things underneath the hood that we just can't see. I love you to reflect on that.

And then just one small question, just sort of coming in to work today. So a headline about possible tax changes in Philippines on CSDs. Maybe give some context. I don't know if that's a special thing or something that was expected.

Thanks, Robert. I mean, I think -- and obviously, you listened in, obviously, on the KL side. I mean it was the biggest FIFA activation globally. Certainly, CCEP played the big part on that. It's always been a big event for us, but I think there was something very special about this year. And I think it was mainly in the space of digital and being able to drive more transactions with FIFA.

I think [indiscernible] on the team both in Atlanta and locally in Europe, really focused on making FIFA transaction events. We obviously had the Panini initiative, which was huge in Europe. We had a lot of opportunities for our consumers to engage on pack. That was quite different than previous FIFAs.

Yes. And I think overall, that led us to be able to activate more cases on the floor, et cetera. Also, you mentioned speed, I mean, I think the gold can coming out so quick for Spain, I think, again, that just shows how as a system and as a business, we're able to move fast, make fast decisions and be prepared. We had a number of gold cans ready, just in case. I won't name the ones that didn't make it, but clearly, we're happy Spain, and that's one of our key markets, made it.

So probably the digital tech and social engagement, Robert, would be what I call out as being at a very, very high level compared to previous FIFAs.

I mean on the sugar tax, I mean, there is some stuff in the media today. I think we need a bit of time to to go through that. I think if you take a step back, though, we're well used to dealing with tax changes across all of our markets. If you look last year, we had the France sugar tax which had some impact within the year.

But as a good example, in quarter 2, we were back into volume growth in France. I think when you look across our portfolio, with the number of packs and brands that we have, and our MGM capability, we're well -- we're in a good position to be able to manage the impact of those types of tax changes as they come. So we'll do a bit more digging on what's actually proposed for the Philippines and reflect on that for our plans for 2028.

We already have a tax in the Philippines. It's an excise tax. So it's across all beverages, sugar and sweeteners. So that's already in place, Robert. So let's see what changes they proposed to that as well.

Our last question for today comes from the line of Carlos Laboy, HSBC.

Damian, I was hoping you could follow up a little bit on Lauren's question. What has changed that is helping you drive recruitment of more customers better. Is it an internal mindset? Is it that you have new tools that allow you to crack the code on these opportunities better? And is this something that you think can continue to drive growth in your client base going forward?

Yes. Thanks, Carlos. I mean, it's something that's been a consistent part of our story at CCEP. I mean, I think probably a couple of years ago, we talked about having a bolder view on the away from home market, I mean that market had been in decline for a while. And we talked about not being passive about that. And actually, working across a number of areas to drive growth in Away from home, including customer wins.

So one pillar was customer wins. The second pillar, which we talked about was cooler placements, so to drive more availability in that space. And the third element was leveraging our consumer assets better to drive transactions and I talk FIFA doing that as well. Clearly, as we broaden our portfolio, we've become a very compelling partner for customers we bring to all of them a Hydration platform, a leading Energy platform, clearly, the leading CSD portfolio.

And then obviously, we're looking at bringing more innovation in Sports and Hydration. So when you look at NARTD, there's no one really with the breadth of portfolio that we can bring. There's a lot of companies with individual strength in different segments. I think that's definitely compelling, Carlos. And I think the more we talk to that total portfolio and the category opportunity, the more it plays into customers needs for profit and growth.

And typically, they earn good margin on our products, particularly in out-of-home. And obviously, as businesses become tougher with rates or with inflation around labor, selling a category that generates good margin, definitely makes life a little bit easier for a sales force. So Yes, probably a combination of all those elements. It's always been part of our story. It's always been a passionate part of our business that we want to onboard a lot more customers. That's definitely true in the Philippines, Indonesia. We're having a lot of customer wins in Australia and also in Europe, yes. So happy to be able to talk to you today.

Thank you. I would now like to hand the conference back over to Damian Gammell for his closing remarks. Damian, please go ahead.

Thanks, Mel. And a big, big thank you to everybody who joined us this morning or this afternoon. So as Ed and I talked to, strong first half, I'm very happy that today, we're reaffirming our full year guidance. We are very pleased with the progress against our strategic priorities as we've outlined today. Also pleased with the start of half 2. And I think the strength of our business demonstrates resilience and the consistency of our growth model.

We do look forward to speaking to you again in Q3. In the meantime, I hope everybody can get a break and enjoy a great summer ideally in one of our markets and obviously enjoy a nice cold beverage from one of our new coolers. So thank you very much, and have a great rest of the day. Thank you.

That concludes our conference for today. Thank you for participating. You may all disconnect.

Good afternoon, and thank you very much for joining us. I'm Matt Sharff, Investor Relations Director here at CCEP. I'm joined this afternoon by our VP of Sustainability, Joe Franses.

Before we get started, a little bit of housekeeping. The webinar is being recorded and will be made available on our website at the conclusion of the call. We have a slide deck that we'll take around 25 minutes to run through before we open up for your questions.

To manage logistics, your cameras and microphones are all disabled for the duration, but you're able to ask any questions via the chat, and we'd encourage you to do that. We do have a few which were submitted in advance, and we'll start with those, giving you a little time to submit others once the presentation concludes.

Finally, before I hand over to Joe, I'd just draw your attention to our forward-looking statement, which is at the start of the slides. I won't read through that now. You can all do that at your leisure later on.

With that, I'll hand over to Joe to kick off. Over to you, Joe.

Great. Thank you, Matt, and thank you, everyone, for joining us today. Our intention will be to share an overview of our approach to sustainability and to demonstrate how sustainability supports business growth and value creation. We've now fully integrated the Philippines into our plans and into our targets, and we'll provide an update on the progress we are making. And then we'll share some of the actions we're taking to deliver against the targets and move faster where we're able to, all the whilst continuing to navigate the challenging external context that we find ourselves in.

So let me begin with a quick reminder about our business. CCEP is a EUR 21 billion business, serving over 600 million consumers across 31 markets, spanning Europe, Australia, Pacific and Southeast Asia. We have 85 manufacturing sites, with 90% of our products produced and consumed locally. And in 2024, the Philippines joined the CCEP family, and that was a result of our acquisition of CCBPI together with our joint venture partner, Aboitiz.

Sustainability is increasingly integrated into everything we do. We serve the world's best brands with 39,000 great people, focusing on best-in-market execution and aiming to do all of that sustainably. And we've embedded this into our day-to-day business through our group-wide sustainability action plan, This is Forward. This is Forward itself was launched in 2017, and it's evolved and has grown as our business has changed. In 2021, we updated the plan following the acquisition of Coca-Cola Amatil. And only last month, we updated and extended our plan once again, this time to incorporate the Philippines.

Throughout our journey, we've adopted a science-based approach to everything that we've done on sustainability. It's key to our day-to-day. We were, back in 2015, one of the first 10 companies to set a science-based climate target ahead of the Paris Climate Agreement in COP 21. And I'm delighted that our most recent 2030 emissions reduction target, including the Philippines, has now been validated by the Science Based Targets initiative.

Throughout our journey, sustainability has helped to create a significant amount of value for our business, not only P&L benefit from the saving of energy and water and the use of less packaging, but also through the long-term value creation we've been able to build with our customers, the brand love and consumer preference we've built through innovation, and of course, the strong employee engagement that is linked to our ongoing commitment to, and of course, our investment in sustainability. And the good news is that in addition to driving value for our business, we're also making significant progress against our key environmental and social metrics.

So what you've got on screen here is a quick overview of our 2025 performance. So by the end of last year, we had reduced greenhouse gas emissions in absolute terms, that's Scope 1, 2 and 3, by nearly 19% by our -- versus our 2019 baseline. And of course, we're doing that whilst we continue to grow the business. At group level, 46% of the PET plastic we use to make our bottles was recycled PET, at the end of 2025, actually reaching 64% in Europe and about 22% in our APS markets. Over 75% of the bottles and the cans that we sold last year were together with our partners collected for recycling.

And we continue to make strong progress on water, returning to nature the equivalent of over 100% of the water we use in all of our finished drinks, and we do that through 50 different water replenish projects. And at 18 of our sites, which experienced the highest level of water risk, we go even further on water replenish, focusing not just on the water we used in our finished drinks, but the total amount of water we use at each site. And last year, we returned to nature the equivalent of 56% of the total water we used at those 18 locations. And on communities, we continue to focus on providing skills development opportunities across our markets, supporting over 146,000 people since 2023.

Last month, we updated our plan. And in doing so, we've sharpened our focus on topics that are of greatest importance, not just to our stakeholders, but those that we can make a significant difference. Critically, our long-term strategic direction remains unchanged, aiming to reach Net Zero emissions by 2040, focused on the collection and recycling of our packaging and on using recycled materials and on working to achieve water security across our value chain and continuing to work to strengthen and support our local communities.

And we now have six group-wide 2030 targets, all now including the Philippines. And each target is supported by a comprehensive 2030 roadmap. And those roadmaps ensure that our plans are credible, they're ambitious, they're focused on delivery and that they reflect the lessons that we've learned along our journey. On climate, we've updated our 2030 target to reduce Scope 1, 2 and 3 emissions in absolute terms by 30% versus '19. That now includes the Philippines and integrates a new target for emissions from Forest, Land and Agriculture, otherwise known as FLAG.

On water, we've retained our overall 100% water replenish target and added a target to replenish 85% of the water we use at those 18 high-risk locations, aiming to get to 100% by 2035. And that aligns with The Coca-Cola Company's focus on over 200 high-risk locations across the Coca-Cola system globally. Our target to collect and recycle the equivalent of 85% of the bottles and cans we sell now reflects the progress we anticipate to make with collection partners across all of our markets by 2030, but it also reflects the complexities and challenges we face on collection and recycling, and I'll say more about that when I come to packaging.

On recycled content, our group-wide target for plastic is for at least 30% of the PET we use to come from recycled plastic. And whilst this is lower than 2025, this now reflects the significant change we anticipate over the next five years and the challenges we face in terms of availability, access to recycled PET and the continued challenge related to the significant cost premium versus virgin.

And finally, on communities, our target on skills now incorporates the Philippines as well and reflects the scale of many of our different programs and partnerships that support skills for work, skills for communities and skills for business. Some of the things that you won't see in our plan have now been embedded into our day-to-day, and this includes our continued focus on low- and no-calorie drinks, our focus on renewable electricity and also our focus on water efficiency, all of which remain core enablers to the targets that I referenced before and also remain metrics that we will continue to track and report on an annual basis.

So let me go now a little bit deeper into each of our four core topics, climate, packaging, water and nature, and communities. Climate change continues to be one of the most serious and complex challenges facing the world. And we recognize that everyone must play a part in cutting greenhouse gas emissions and supporting efforts to limit global temperature increase in line with the Paris Climate Agreement.

Over the past decade, we've built a really strong understanding of greenhouse gas emissions across our value chain. And we've been using the greenhouse gas protocol to guide our carbon accounting, our reporting and disclosure. Unlike many other businesses in our sector, ingredients and packaging account for 60% to 70% of our value chain emissions, with transport and manufacturing and our cold drinks equipment accounting for a much smaller segment of emissions.

And if you look at that another way, the vast majority of our emissions are Scope 3, including both upstream and downstream emissions, ingredients, packaging, third-party transport, our cold drinks equipment, waste in our operations and also a small amount of business travel. And we publish a full emissions breakdown in our annual report for those who want the full detail.

So our climate strategy is focused on what we have to do in order to reduce our emissions in line with climate science. And that means a dual focus on our own operations and our value chain, with supplier engagement to reduce Scope 3 emissions a critical part of the strategy, and aiming to move faster through our investments in low-carbon innovation and technology.

And this means continued focus on, for example, using renewable electricity in our operations. At the end of 2025, 84% of the electricity we purchased was from renewable sources. That was as high as 100% in Europe and nearly 67% in our APS markets. It means a continued focus on reducing the carbon footprint of the packaging we use, for example, by using recycled content and increasing collection and recycling. And it also means asking our 220 carbon strategic suppliers to set their own science-based targets and follow our lead. And that's something that nearly 60% have already done.

And we bring all of this together in our long-term climate transition roadmap and investment plan. And that plan sets out our pathway to meeting our 2030 science-based target and our long-term journey to reach Net Zero by 2040. And you can see that we had in our 2019 carbon inventory baseline around 8.5 million tons of greenhouse gas emissions. And we've already, as I said before, reduced emissions in absolute terms by 19% versus 2019.

And our roadmap is supported by an investment plan, EUR 385 million investment between '25 and '27 in emissions reduction. And it's also demonstrated by our ongoing commitment to the fact that carbon reduction is included in our long-term incentive plan and has been since 2020.

So looking ahead, we have a clear set of opportunities identified to reduce emissions. For Scope 1 and 2, that includes continued investment in energy efficiency, decarbonization, electrification and renewables. And for Scope 3, this includes a continued focus on supplier engagement and continued work on ensuring that our cold drinks equipment are adopting the highest energy-efficient standards.

And of course, supplier engagement is absolutely critical. So we work closely with a number of partners, including EcoVadis, with whom we assess the sustainability performance of over 400 of our strategic suppliers. We offer training and capacity building via the cross-industry Supplier Leadership on Climate Transition or SLoCT program. We offer sustainability-linked finance directly linked to our suppliers' EcoVadis scores. And of course, having credible accurate Scope 3 data from our suppliers is going to be a critical part of ensuring that we can track the progress we are making.

So in addition to asking our 220 carbon strategic suppliers to set their own science-based targets, we are also asking them to share product carbon footprint information with us. Last year, we conducted a pilot with 15 suppliers, and we aim to expand that across more packaging and ingredient suppliers this year and in coming years. And to support all of that, we are working with Altruistiq and others in The Coca-Cola System to develop a dedicated platform via which suppliers can share product carbon footprint information in a standardized way.

So I wanted to share just a few ways in which our climate strategy is brought to life across our business, a couple of examples. At our Dongen facility in the Netherlands, and that's a site that produces about 85% to 90% of all of the drinks we sell in the Netherlands, we've installed two new electric boilers. And those boilers have replaced their natural gas-powered predecessors. The boilers are part of a new heat grid system that captures residual heat from across the site, and that significantly helps to reduce emissions.

And I'll take one more example. We're partnering with agricultural start-up, Avalo, which is using pioneering AI-based technology to naturally select seeds that require less water, less fertilizer and help farmers to grow crops more efficiently. And we're going to be working with Avalo to try and reduce the carbon footprint of the sugarcane we use, aiming to test that technology next year in Australia.

So let me turn now to packaging, where we have an important responsibility to help address the significant challenge that we're all aware of caused by plastic waste at a global level. As a business, we believe that none of our packaging should end up as litter. So collecting packaging for recycling once it's been used is critical to keeping plastic out of the environment and facilitating a business model where our packaging is collected and recycled.

So our strategy is focused on increasing the collection and recycling of our bottles and cans, on using recycled content in our packaging, on continuing to drive the recyclability of all of our packaging and on continued investment in refillable and dispensed solutions.

So I wanted to share briefly an overview of our diverse packaging footprint. Over 44 billion individual units of packaging placed into our markets last year, of which over 17% were refillable bottles, both PET and glass. And our fountain and dispensed equipment served nearly 4 billion drinks, about 9% of our total footprint. And we've placed a significant emphasis in the last few years to ensure that over 99% of the primary packaging that we place into the market is fully recyclable and compatible with local recycling systems.

As I mentioned before, collection is very much at the heart of our strategy. We support packaging collection across all of our markets, working in partnership with national and local governments and stakeholders. And enhancing collection and recycling infrastructure, we recognize, is not always straightforward. It's often complex and solutions do vary by market.

So in markets where collection infrastructure is well developed like Europe or Australia, we support industry-led and well-designed beverage packaging return schemes. And in markets where collection infrastructure and legislation is less developed like Indonesia or the Pacific Islands, we're committed to proactive voluntary action aiming to directly fund collection solutions to bring back and help recycle our beverage packaging, and at the same time, advocate for extended producer responsibility.

On recycled PET, we have long-standing rPET supply agreements in place across all of our markets, and we have invested in PET recycling JVs to help turn post-consumer PET bottles into new food-grade recycled PET. And we also continue to invest in refillable packaging across our markets. In the Philippines, for example, all of the glass that we use is refillable. And in Germany, we have a well-established returnable glass and returnable, refillable PET business. And over the past 4 to 5 years, we've invested approximately EUR 90 million in refillable lines in Germany and France. And we've recently been piloting 1 liter refillable glass bottles in over 300 retail outlets in France.

And again, bringing the strategy to life on a day-to-day in Germany, Iceland, Norway and Sweden, where we have a deposit return scheme, we're reaching collection rates well above 80%, nudging 90% last year. In Portugal, Volta, the new deposit return scheme, launched successfully only four weeks ago. And we are already on track for the launch of a new deposit return scheme for beverage bottles and cans in Great Britain from October next year.

If I look to our joint ventures, we have PET recycling joint ventures in place with Indorama in the Philippines, with Dynapack in Indonesia and with multiple industry partners in Australia. And all of this work helps to facilitate our purchase of over 150,000 tonnes of recycled PET last year and enables the vast majority of our 500 ml bottles in Europe to be made from 100% recycled PET.

So let me turn briefly now to water, which of course is core to our business, not only the main ingredient in our products, but also critical to our manufacturing processes and our supply chain. And as everyone on the call will know, climate change continues to exacerbate water stress and water scarcity in many parts of the world, and that includes where we manufacture and where we source our ingredients.

So our strategy is focused on delivering best-in-class water stewardship and water efficiency across our own operations, on enhancing water security at our 18 high-risk locations and critically on returning water to nature via our network of over 50 community-based water replenish projects.

Our strategy is informed by the detailed understanding and mapping of water risks, which we undertake together with The Coca-Cola Company. All of our production facilities have water risks assessed through an enterprise-wide water risk assessment tool, and we work very closely with the World Resources Institute to use their Aqueduct water risk tool.

We also complete facility-level vulnerability assessments every three to five years. And as I mentioned before, we categorized 18 of our 85 production facilities as high-risk locations, meaning that they experience the highest level of water-related risks. And at those sites, we've set best-in-class water efficiency targets.

And by 2030 at an aggregate level, we're working to return 85% of the total water we use at those sites to nature and communities. And we do this through community-based water replenish projects, which are managed through NGO partners and often funded together with The Coca-Cola Company and The Coca-Cola Foundation. And those replenish projects aim to improve the natural hydrology of local watersheds, but they also aim to enhance agricultural water use. And some of those projects aim to provide or enhance access to water, sanitation or hygiene or WASH.

But many of those projects also provide significant benefits to the natural ecosystems, and we calculate the benefits in line with the well-established and widely used Volumetric Water Benefit Accounting model. So in 2025, in collaboration with The Coca-Cola Company and The Coca-Cola Foundation, we replenished over 23 million cubic meters of water, and that represents about 105% of our total sales volume.

And whilst that currently exceeds our 2030 target, that's explained by the fact that many of our existing replenish partnerships have just come to the end of their 10-year cycle over the next two to three years. So we're going to have a lot more to do to retain that level of replenish performance in the future.

So to bring that to life, we're investing directly in projects which provide water, sanitation and hygiene or WASH access in communities in Indonesia and the Philippines and Papua New Guinea. And we're also investing in projects which improve watershed health and agricultural water use in priority ingredient sourcing regions, including one of my favorite projects in partnership with WWF and The Coca-Cola Company in the Guadalquivir basin in Spain. And that project helps to support natural habitats whilst helping farmers use water more efficiently.

So I wanted to touch briefly on our fourth pillar, our communities. So with local production, local people and local customers very much at the heart of everything we do, communities is core to our strategy. And so the strategy is focused on supporting grassroots community partnerships, in skills development and in supporting our employees to play an active part in their local communities through our two-day volunteering policy.

Through our Skills for Impact program, we are aiming to support over 0.5 million people by 2030 to gain the skills they need. And that includes skills related to employability and vocation to employees -- skills for work. It includes skills for business, whether that's for SMEs or entrepreneurs. And it includes skills to support livelihoods, particularly in vulnerable communities. And we've already supported over 146,000 people over the last three years. And we've done that always in partnership with local providers and NGOs.

So a couple of examples. Our GIRA Youth program in Spain promotes skills development for young people from disadvantaged backgrounds, helping them to gain long-term employment. And in our 13th edition last year, that program supported over 700 people. And an example from Great Britain, where our partnership with U.K. Youth is helping 16- to 25-year-old overcome barriers to employment.

Across all 4 of our pillars, I hope that one core theme has come through, and that's the importance of partnership because we cannot deliver what we need to by working alone. And that means working in partnership with customers to deliver sustainability-linked business plans. It means joining forces with industry partners to advocate for policy shifts on topics like energy transition, fair access to recycled PET or supporting the UN Global Plastics Treaty. And it also means working with community partners to deliver long-term water, nature and skills benefits. And of course, it means working closely in partnership with our franchise partners, The Coca-Cola Company and Monster.

But it also means investing in innovation and early stage start-ups, which could help us to accelerate and move faster. Like our investment in Hot Green, which is providing ultra-efficient low-carbon heat and steam for use in manufacturing, and that's helping to contribute to our long-term decarbonization. Like our investment in CuRe, which is aiming to turn hard-to-recycle plastic waste into virgin-like recycled PET, and that ultimately could help to unlock high-quality rPET from, for example, colored or contaminated PET that is currently difficult to recycle.

We've invested in Ionech, which is aiming to convert ambient energy from the air into electricity for high-demand uses. And in that -- in this case, it's our coolers that we're aiming for. And then lastly, Airhive, with whom we're exploring the use of direct air capture technology.

And so to close, I wanted to offer a big thank you to those external organizations that provide either validation or recognition, which helps to demonstrate that whilst we have a lot more to do, we are headed in the right direction. So to come back to where I started, hopefully, I've demonstrated how sustainability is fully embedded into the way we do business every single day. It is definitely core to how we make, move and sell our products.

And whilst I said we've undoubtedly got more to do to get to where we need to be in 2030, sustainability is very much embedded into the way we think about the future because when we think about growing our business, there is no other way than doing so sustainably. So Matt, maybe I'll pause there, and then I'm happy to take some questions.

Thanks, Joe. Well, look, I think an obvious place to start would probably be on the thinking behind reducing the number of targets. Obviously, you've touched on that briefly, but particularly on collection and recycled plastic, what was the thinking behind changing them?

So that's a good -- it's a good prompt, Matt. And so look, the headline is that our long-term strategic direction just doesn't change. And the updates that we made a few weeks ago really are about sharpening our focus, ensuring that the plan reflects the shape of the business that we have today, so we've included the Philippines, but also it's about updating the targets to give us really clear direction.

And the targets reflect what we've learned. They reflect the progress that we are anticipating to make, but they also reflect those complexities, the challenges that we're facing. And so if you think about collection, for example, I mentioned before, our 85% collection target, the reality is the infrastructure really is different across markets. So our long-term strategic direction remains the same, but actually, the pathway has become quite complex. So hopefully, the change, the updates that we've made really help to reflect some of that, the progress over the next five years.

So perhaps we can now look at emissions where we've obviously made good progress versus the baseline with a reduction of 19% since 2019. But the targeted reduction of 30% by 2030, so with that in mind, how achievable is it then to reach Net Zero only 10 years later?

Yes, that's a good one. And look, it's not easy. We're hugely proud, Matt, of the fact that we've reduced emissions, again, in absolute terms by 19% versus our 2019 baseline. And the critical bit is we've done that whilst we've grown the business. And I think that's really key.

The other bit that I really want to stress is that all of our targets, and climate is no exception, all of our targets are underpinned by really clear credible roadmaps. And I mentioned the investment that we're putting into decarbonization before. And those roadmaps really set out all of the main levers that we'll pull to get us to that 30% reduction. And look, reaching 2030, it will be a milestone and we've got a lot to do to get there, but look, it also locks in the reductions we can deliver today through the actions that we know are possible.

So it locks in renewable electricity. It locks in energy efficiency. It locks in the packaging changes, but also it gives us real visibility on the complex -- where the complex challenges actually are, particularly in Scope 3. And we know that we're going to require much, much deeper collaboration with the suppliers, more innovation, more collaboration.

So when we talk about Net Zero, whilst we've got loads to do, it's not a jump into the unknown. So I'm completely -- I mean I'm with you on the question, it's not going to be easy to get to 2040. But don't forget that the 2040 journey also depends, by the way, on significant change in the external world.

So for example, we are dependent on a faster transition to, for example, renewable electricity, particularly in our developing markets. We're going to be reliant on continued decarbonization. We're going to be reliant on continued electrification of transport, for example, and continued policy shifts away from fossil fuel. So not going to be easy. I can't pretend that, and we've got all of the answers, but I'm very confident that we're headed in the right direction for 2030.

And just following on from that, and we've had a few questions coming in on the chat, it'd be really good to hear your thoughts on packaging, which is obviously a key contributor to our emissions, as you pointed out. The questions coming in are really asking about why we've set our target for rPET at 30% when we obviously extended that in 2025. So how much of that is down to the inclusion of the Philippines? Are there other factors at play? I think you mentioned structural challenges. If you could go into them a little bit.

Yes. Look, it's a really fair question. And I mean, at the heart of the challenge is that the cost premium on recycled PET versus virgin just has not reduced, Matt, in the way that we would have expected it to. And so the premium we pay in many markets is currently not commercially viable. And that really means taking decisions against the backdrop of those difficult external conditions that we and the rest of the industry are facing.

So it's why, at a group level, our 2030 rPET target is lower than where we've been. But we really believe that the 2030 target of 30% is credible. We believe it's achievable across the whole business, not just in our developed or advanced markets. And really importantly, that target, it's a floor, not a ceiling. So looking ahead, our ambition is to go beyond our 2030 target.

And look, to make -- to get rPET to be competitively priced, we need a lot. We need to, first of all, deliver the deposit return schemes that I've referred to. We need policies that are going to help us get both the volume that we need back of our packaging, but also quality and fair access to recycled PET. And that's going to require a lot of investment. So it's definitely a challenge, but we're confident that the 30% is the right 2030 target based on the complexity that we see in the market.

Great. I think probably a lot of people on the call will be interested to hear about the overlap of water and climate. And we have a couple of questions on that. Specifically, the risk of increasing water stress in Europe, our climate disclosure suggests this will have a high impact over the long term. So can you tell us a little bit more about that?

Yes. Look, climate change and water risks are really closely linked and particularly in parts of Europe, actually, where rising temperatures and changing rainfall patterns are beginning to intensify water stress. We're working really hard to -- I mentioned before, the understanding of those risks, but we're really working hard not just to understand but to address those risks.

So the clear targets and investment plans that we've got in place protect both the resilience, the long-term resilience of our business, but also aim to address and improve and enhance the health of local watersheds. And of course, those watersheds, we rely on those watersheds, but our communities also rely on those watersheds. So the principle of long-term water security is very much at the heart of what we do. So all of our manufacturing sites, for example, undergo those baseline water risk assessments. I mean that really helps us to understand where we're going to see risk in the future.

But we've already experienced potential water restrictions due to drought in several of our markets. Authorities in France, Great Britain and Spain particularly raised those -- raised the prospect of that. Now those restrictions didn't, in the end, affect our sites, but it's really important that we understand that all of our water work, whether it's our water efficiency target, also our water replenishment projects, all of that helps in the long term to mitigate those regulatory risks and helps to lessen the potential water restrictions that we might see.

We've also -- interestingly, we've also developed a water scarcity handbook that we developed based on the experience of those markets. And that handbook helps our local businesses to mitigate potential water scarcity impacts in the short term. And look, over the long term, we're going to have to continue to prioritize all of those different investments and initiatives that are going to help to address and reduce both the water and the climate-related risks we've identified.

Just changing tack slightly, how do sustainability considerations affect consumer trust and purchase behavior for CCEP's brands? And what does that mean, do you think, for where we focus investment and execution?

Look, sustainability plays a really important role in building consumer trust and also long-term brand credibility, particularly on visible issues like packaging. And look, we know from all of our research that consumers increasingly expect brands to act responsibly. And where we do demonstrate progress, that supports trust and it builds brand strength and equity over time.

But having said all of that, we're very aware of the gap between stated expectations and then, I guess, actual purchasing. Sustainability is rarely, if we're honest, rarely the primary driver at the point of purchase because factors like price or choice or taste are still key. And that is especially true in a cost-of-living or challenging cost-of-living environment. But what's critical is that many of the different sustainability initiatives that matter most from an environmental standpoint also make strong business sense.

So when you look at what genuinely reduces, for example, greenhouse gas emissions or helps us deliver sustainable packaging, for example, increasing recycled content, all of those areas often have the potential to reduce overall operating costs, particularly if you think about the P&L and energy and water savings. So on the whole, there are many cases where there's a sweet spot between reducing emissions, improving efficiency and strengthening financial performance. And when they all align, that's that sweet spot.

So let's just go back into something more specific and probably relevant. We've recently seen the launch of a deposit return scheme in Portugal, that's just kicked off a couple of weeks ago, and will be operational in the U.K. from October next year. So it'd be good to hear your views on DRS schemes generally, what our expectations are for collection rates and what, if any, impact we'd expect actually on volumes.

So look, we're -- as I said before, we're really supportive of deposit return schemes in developed markets, provided they are well designed and they are industry-led. And we know that in markets with DRS in place, you can get up to 90% or even 95% collection for PET bottles and cans. And that's critical -- it's critical not just from a recycling perspective, but also because it helps support give us an availability, increase the availability, for example, of high-quality recycled plastic that we can use back in our bottles. And of course, it helps to reduce emissions as well.

We've got, you mentioned Volta, the new deposit return scheme in Portugal, gone live earlier this month. And as new deposit return schemes go online, you would expect to see a ramp-up period as systems bed in. But honestly, over time, our expectation is that well-designed schemes will improve significantly collection rates and heading up to that 80% to 90%. In terms of volume, look, evidence to date suggests that deposit return schemes do not have a material long-term impact on demand. So consumers tend to adapt quickly. And in established markets, DRS simply becomes part of normal purchasing behavior.

And we're really looking forward to seeing how they do in Portugal. It's only been -- it's early days. It's only been four weeks that Volta has been operating. And there's still about a month until bottlers are required to have fully compliant stock. So we're still in that transition period. So more to come on Portugal.

And so just continuing, I suppose, along that theme, talking about packaging, we often get asked about refillables. We have a good-sized refillables mix in Germany with reusable rPET. We've got glass in Spain, and obviously, the Philippines, where we have a lot of reusable glass. So what role do we expect refillables to play over the coming years?

Look, we believe in the right packaging for the right occasion. And I mean, you're absolutely right. We've got a well-established refillable glass business in many of our markets. And I mentioned before, over 7.5 billion refillable bottles being placed into the market every single year, and that's 17% of total units. And over 90% of the glass we use is refillable glass. We've got markets like Great Britain, for example, that are one-way glass, but vast majority of our glass is refillable.

And I mentioned before the investment in those systems, so investing in refillable production. But at the same time, refillables are not a one-size-fits-all solution. So we use the word they make good economic, environmental and operational sense. And it's worth noting that there's often a breakeven when it comes to refillables because successful refillable schemes depend upon bottles coming back again and again and again and again. Coming back one time doesn't really help from an environmental perspective. And also, if bottles are transported over 250 kilometers, there's a bit of a breakeven point. So refillables are definitely not a one-size-fits-all solution.

One thing that, alongside traditional refillables, we're also investing in next-generation digital dispense equipment, and that allows consumers to enjoy drinks using, for example, refillable -- sorry, reusable cups, refillable bottles. So we've got that as well as the traditional refillable glass, and in Germany, refillable PET as well.

So just moving away from packaging a little bit, we've just got a couple of questions on nature and biodiversity. So broadly, the question is, how is CCEP developing and governing its nature and biodiversity strategy across disclosures, obviously, including TNFD and target setting like SBTN? And what's the expected scope and timeline for progress here?

That's a good alphabet soup there, Matt. Look, it's an emerging area for us. And the majority of the nature-related impacts that we see actually are directly linked to our water use. I'll go back a couple of years. In '24, we carried out our very first nature and biodiversity risk assessment. We did that across our value chain in line with the SBTN methodology.

And that helped us to get, I guess, a first handle on identifying our impacts, and also, it helped us to understand really where we are dependent on ecosystem services, but it also helped us practice where we might need to start to act. The work also really helped to inform our double materiality assessment. We published that in our annual report. And biodiversity and ecosystems is one of those topics that we flagged as material.

Last year, we followed that up with a second nature and biodiversity assessment, and that was in line with the Task Force for (sic) Nature-related Financial Disclosures. We're still completing. We're just at the very end of that assessment. And now we're working to think about how do we align our disclosure in the future linked to both the ESRS, the European Sustainability Reporting Standards. And of course, that's linked to TNFD.

So we've got a bit more work to do. I think that work is going to continue in 2026. But what we're really doing now is working to identify where in the value chain is that most acute interaction with nature, really understand those interdependencies and also where the opportunities are, but most of those relate to water.

And I mentioned before, Matt, in terms of the water replenish projects, many of those water replenish projects actually provide significant benefits to nature, particularly those that are providing direct nature-based solutions. So if you think about water restoration, it's not just restoring a local river, but it also has a significant benefit on local biodiversity. And of course, that varies project by project.

Worth also stating, I mentioned right at the beginning, I'm really pleased that our updated climate target includes both a Forest, Land and Agriculture target, so a FLAG target. But as part of that, there's also a deforestation commitment in there. And for our key commodities, that means pulp and paper packaging and also coffee. So we're looking at nature. I think we've got a lot more to do. So probably one to continue to monitor and look out for in the next year.

We've had one more that was just submitted earlier. We've got time for a couple of more questions. There's one I'd like to finish on. But before we get to that one, where have you deliberately chosen not to invest in relation to sustainability, which I think is a great question. And how do you make those trade-offs?

Look, I guess -- that's a great question. I guess, like the rest of our business, every sustainability initiative is assessed because we look at impact, we look at feasibility, we look at cost and we look at deliverabilities. So can we do this? And where we've reduced spend or chosen, I guess, chosen not to invest is typically in areas where we know that maybe the environmental benefit is marginal or where the economics don't stack up or where we know solutions are maybe not scalable at the moment across our business.

And you see that reflected, for example, in some of the targets that we've updated. And look, recycled PET is a really good example. In some markets, we're really well advanced, but in others, the availability and really significantly the cost of high-quality recycled PET just remains a constraint, and we're not able to lean into it in the way that we'd like to. So in that instance, that's why we've perhaps taken a more measured approach.

Ultimately, I think there's always a bit of a trade-off. So it's a bit of a trade-off between credibility and the return we get. And frankly, I'd rather, as a business, we focus our investment and time on initiatives that we know we can deliver a significant environmental impact, we know we can deliver and we know we can drive long-term value for the business and that we don't overextend into areas that don't quite make the right sense. So I don't know if that answers the question, but that's kind of where we're thinking.

Well, just before we wrap up, there's one other, which I think is a good question to end on. So you've been through what success looks like, I guess, purely from a sustainability perspective in This is Forward by 2030. But what would success look like from a commercial perspective?

Well, it's about bringing the two together, I guess, is the summary. But look, from a commercial perspective, I guess it's a business that is more resilient. It's a business that is more efficient, better positioned for long-term growth. And probably if you think about our cost base, it's probably a lower cost base when you think about things like energy or packaging or water.

If we get this right, we will certainly reduce our exposure to some of the volatility that we're seeing. It will reinforce our supply chain. But it also means probably a business that has greater operational flexibility. So it means that as a business, we're going to be able to, I guess, secure our license to win or our license to operate far longer.

And look, from a brand perspective, I mentioned before, success is about supporting long-term brand trust. And look, overall, by 2030, when you look at This is Forward, if we get it right, it will have helped us to create a resilient and competitive business, it will have delivered significant value, it will have positioned us for the decade ahead, but it will also have hit all of those key environmental and social indicators that I've referred to. But at the same time, Matt, we're also the first to recognize that we've got a long way to go to deliver those roadmaps. So I'm counting on the partnerships that I referred to before.

Excellent. Look, Joe, thank you very much for your time. And look, thank you, everyone. We appreciate your participation. If you did ask a question that we haven't managed to cover, we'll be sure to e-mail you a response. Should you have any other sustainability-related questions or indeed sort of broader strategy-related questions that you'd like to engage on, please do reach out to me or any of the IR team. Wishing you all a lovely evening and a weekend when we get there. Thank you very much.

Thanks, everyone.

Hello, and thank you for standing by, and welcome to today's Coca-Cola Europacific Partners Q1 2026 Trading Update Conference Call. [Operator Instructions] I must advise you this conference is being recorded today. I would now like to hand the conference over to Vice President of Investor Relations and Corporate Strategy, Sarah Willett. Please go ahead, Sarah.

Thank you. Thank you all for joining us today. I'm here with Damian Gammell, our CEO; and our CFO, Ed Walker.

Before I hand over to Damian, a reminder of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in today's release as well as the detailed cautionary statements found in reports filed with the U.K., U.S., Dutch and Spanish authorities. A copy of this information is available on our website at www.cocacolaep.com.

Prepared remarks will be made by Damian. We will then turn the call over to your questions. Unless otherwise stated, metrics presented today will be on a comparable and FX-neutral basis throughout. Volume movements, unless otherwise stated, adjust for the impact of 6 more consumption days in this quarter when compared to the same period last year. Following the call, a full transcript will be made available as soon as possible on our website. I will now turn the call over to our CEO, Damian.

Thank you, Sarah, and many thanks again to everyone for joining us today. Firstly, I would really like to thank all of our colleagues for their continued hard work and dedication to this great business, which next month celebrates its 10th birthday. It's been a good start to the year with CCEP continuing to lead the way in FMCG in creating value for our customers across our markets and in innovative and growing categories where we are gaining share.

While Q1 is typically our smallest quarter, we have delivered broadly in line with expectations. And today, we are reaffirming our guidance for the full year 2026. Top line growth in the quarter has seen revenue continuing to benefit from the positive mix drivers we saw last year, driven by areas such as more coolers and the growth in Monster. We also delivered solid comparable volume growth beyond the benefit of a slightly earlier Easter.

The category remains really attractive for our consumers and customers, and it remains as competitive as ever. Price relevance across all occasions remains key, with value continuing to play a role for shoppers in our developed markets. And in our emerging markets, we continue to focus on entry-level affordability to build the category for the long term. So as we did last year, we continue to build our total beverage offering, leveraging our diverse brand and pack range and our capabilities in revenue and margin growth management.

This, of course, goes beyond pricing as we continue to balance premiumization with affordability. We know that value is playing a role for a lot of consumers, but we also know they love innovation and they love excitement. As a category leader, we take the role of bringing this to the consumer more taste innovation with new flavors, more pack innovation and more promotional innovation, increasingly leveraging AI, which I will come on to next with more wind mechanics and more value add.

All of this has supported positive share gains in Europe. This has been driven by strong growth in zeros in colas, flavors, sports and in energy. We've also seen a sequential volume improvement in APS, supported by share gains in Australia, more normalized volumes in the Philippines and continued encouraging signs in Indonesia.

Volumes in Europe grew by 1.4% on a comparable basis, primarily driven by growth in Germany and GB, particularly in the home channel where we typically see more Easter-related spending and typically in larger future consumption packs. This was reflected in our revenue per unit case growth alongside those positive mix benefits I mentioned just now, which I'm really, really pleased with. We grew APS volumes by 1.9% on a comparable basis, driven by the Philippines, double-digit growth in the Pacific Islands and PNG and further improvement in Indonesia, driven by sparkling supported by a solid Ramadan festive period.

Our revenue per case reflected a headwind from the Suntory alcohol exit, which had just over a 3% impact on APS revenues and 1% at a group level. Fantastic in-market execution has supported a strong start for new innovations across our markets, which in Q1 have been largely focused around the Coca-Cola trademark. As I said before, bolder moves on Coke are the name of the game, and we are seeing the benefits. Strong distribution of the nostalgic Coke, Cherry float in GB is supporting the rollout of Cherry more broadly with the excellent Devil Wears Prada movie sequel campaign supporting recent improvements in Diet Coke.

We've seen a great start for the new Coke 500 ml Super Can or Super Fan Can as it's known in GB. We're also relaunching Zero Caffeine, now in much more eye-catching black and gold packaging supported by a partnership with the newly released 007 First Light video game. In ARTD, we've added to our growing alcohol portfolio with the additions of [ Bacardi Spiced with ] Coke and the recent launch of [ Absolut Vodka ] & Sprite Pineapple. Monster more broadly has continued to motor from where it left off last year, with volumes up by 20% or more in many of our largest markets supported by new launches and the strong growth of core variants like Ultra White.

There have been multiple months of launches during the quarter, including rehab, a lineup of tea-based [indiscernible] and the latest juice variant Viking Berry. This variant has been the strongest energy release to date in, for example, GB, our largest energy market, where it's already outperformed last year launches of [ Rio ] Punch and Lando.

Q1 saw further progress at away from home with some great customer wins in QSR. These include the American team fast-growing Chilis casual dining chain in the Philippines and the largest holiday park operator in GB park theme hosting 66 sites and attracting 3 million visitors annually. We've also made great progress around placing even more coolers with a particular focus on convenience of food to go outlets, supporting immediate consumption. So as you know, what is cold is sold. So far this year, we've already added around 40,000 more Coke and Monster coolers with more to come. For example, we'll be adding up to 1,000 co-convenience stores, a great win for our GB team.

Now looking out to the rest of the year, much of our planned pricing is now in market. We have solid commercial programs in place with plenty more innovation and excitement to come. For example, in flavors, new Sprite Chill Zero will soon be available across our markets together with the latest birth of the Fanta Wanta campaign with a new Gen Z focused gaming tie-up with Xbox. We've more Fuze tea flavors to come in Europe, an expansion of Lift in the Philippines and more in energy across the Monster portfolio.

And of course, as an avid football fan, June sees the start of the FIFA World Cup, which we'll see is front and center with colorful exciting in-store activations and consumer promotions particularly around Coke and Powerade. So all in all, lots to look forward to, to excite both our customers and consumers. More broadly, the macroeconomic environment is increasingly uncertain, particularly given the situation in the Middle East. We are resilient and have a robust operating model. So while input prices have been affected, we are able to manage the impact.

Our highly hedged commodities position now at around 85%, ongoing efficiency programs and control of discretionary spend gives us good visibility on costs for the year. Our planning has been based on a temporary market disruption. And whilst we aren't currently seeing any material impact on consumers, we're monitoring the situation closely, and we'll adapt our plans accordingly should things change.

We're continuing to invest in our business and coolers, as I mentioned, in our supply chain and our new mega plant outside Manila on track to begin production at the start of 2027 and also in our digital capabilities. As an example, we've recently launched Kira, a newly developed natural language chat interface for our insights team, helping them analyze complex and diverse data to drive deeper understanding of our brands, markets and power swifter decision-making as a result.

As I mentioned earlier, we have reiterated our guidance for the full year. As a reminder, that is for between 3% and 4% revenue growth around 7% operating profit and comparable free cash flow of at least EUR $1.7 billion, which will be half 2 weighted as usual. Today's dividend declaration and our continuing share buyback program demonstrate the strength of our business and our ability to deliver continued shareholder value.

So just before we take your questions and a reminder of our sustainability webinar on Thursday, which will provide details on progress on our business forward targets, which we've now updated to include the Philippines. So again, thank you for your time today. Ed and I will now be very happy to take your questions. And I hand the call back over to you, operator.

[Operator Instructions] First question today comes from Edward Mundy from Jefferies.

So my question is really around the current period of inflation and volatility. I mean when you look back at the last round of inflation volatility in 2022. I'd love you to compare across what you're seeing today versus then based on what we know today. So COGS looks a little bit less bad for '27. Consumers arguably a little bit more fatigued. I mean how do you adjust your playbook for this picture? And listening to your opening comments just now, Damian, it does sound like the degree of taste, pack, promo innovation is probably amongst the fullest it's been for a long time. How is that helping to play into what you're looking to achieve?

Yes. So thanks, Ed. Maybe I'll just talk to your last point and then hand the call to Ed in terms of how we see it versus 2022. I mean I think you're spot on. We've been working really hard to continue to bring a lot of innovation and excitement to the categories. We think that as obviously brand leader, category leader, that's a primary responsibility. And you're seeing that hitting the market, whether that's with Coke Zero Zero or a number of our other innovations. And we see consumers and shoppers responding to that. I mean value is still important. We know that for a lot of our shopper base. Over the last couple of years, I think we've navigated that opportunity really well, providing available affordability, but also not forgetting that ultimately what drives the category is innovation, excitement and passion. And I think with the assets we have this year, whether it's FIFA or some of the assets coming in the second half of the year, we will be able to navigate nicely that balance of creating category excitement and growth, which is ultimately what our customers expect from us and manage some of those affordability and inflationary challenges. Don't see it as 2022, to be honest. Maybe I'll just pass to Ed and he can give a bit more color on how we're thinking about that.

Yes. Thanks, Damian. And thanks, Ed, for the question. So yes, we've learned a lot, I think, from 2022. As we look at these type of crisis, we really split our activities into 3 areas. Firstly, making sure we have security of supply. So we've done a lot of work over the last few years in making sure we have multiple sources of supply for key commodities and materials and we're not dependent on particular geographies or particular suppliers and have multiple contingencies for the supply. And as we sit here today, we're in great shape and no material risks from a supply perspective. The second area is around cost as we see the impact on input prices. So as you know, we have a very extensive hedging program, and we're over 85% hedged now for the remainder of the year. And actually, since '22, we've also started working directly with suppliers and hedging their exposure or looking at how they can reduce the risk within their supply chain because, obviously, otherwise, that ultimately can get passed on to us. So we're in good shape, certainly for 2026 in terms of that hedging. And then finally, is the impact on demand. I think what is similar to '22 is that I think the crisis isn't specific to soft drinks or ourselves. It's going to be a general challenge on inflation across all of food and drink, which in turn can impact consumer demand. But as we sit here today, we don't think it will be as severe as 2022. And obviously, we monitor the situation carefully. As you also know, we've got a number of [ OR and MGM ] technique, a very broad portfolio from a brand and pack perspective. So there's a number of levers we can pull if things do change to mitigate the risk. But yes, lots of learnings back from 2022.

We'll now take the next question. This is from Bonnie Herzog from Goldman Sachs.

I wanted to ask about the volume improvement in APS. I guess I was hoping for some more color on what's driving this and how sustainable you believe this is? Also you touched on encouraging sparkling volumes in Indonesia. So could you provide a little more color on maybe what innovation and/or activation or marketing is driving this? And how we should think about the ultimate opportunity you have in sparkling in that market?

I mean we're very pleased with our APS volume performance overall. I think there's a number of areas that I'd call out. I mean, firstly, our businesses in Australia and New Zealand Pacific Islands, in particular, have been performing really strong on our -- particularly on the sparkling category, and we see that being very sustainable. As you know, we've had the exit of some of our Suntory assets out of there. So that's made the numbers a little bit lumpier, but that's merely through now. And underlying our sparkling business in those markets is performing really well and benefiting from many of the activities we talked about earlier in terms of new flavor innovation, pack innovation and great marketing assets. Philippines has performed well and continues to be a market that we really get excited about in terms of its long-term growth, not just on our core sparkling. We've now launched energy. We bought back Lift. So we've got some good brand innovation going into the Philippines. We see that business performing in line with our expectations. Indonesia, it was great, particularly for our team locally to enjoy a successful Ramadan and festive period, really all driven by sparkling, Bonnie. So if you look at our underlying numbers, our Tea proposition in Indonesia is still work in progress. We're very happy with where we've got to with our sparkling portfolio. And really what's been driving that is continued investment for the Coke company against the consumer. So as we've talked about before, building more relevance for our brands and therefore, the sparkling category. We've made some good decisions around route to market, which we've talked to, which meant we were a very resilient and stable business during Ramadan in terms of just getting all those cases out. So that was great. And then clearly, we're looking at as we move forward, how do we continue to drive sustainable affordability so the consumers can enter the sparkling franchise in Indonesia. So that's really what drove the business year-to-date. That will be what drives it for the rest of the year. Yes, and we're excited about it. And I think it's great to have a winning Ramadan. As you know, that's a key, key period for us in that market. So across APS, lots of positive signs coming out of Q1. A lot to do still, which is great. So I think that sets us up for multiyear growth in that region, which is really what excites us.

Next question is from Matt Ford from BNP Paribas.

Just one question, I suppose, on the portfolio. I think within Q1, I think you reported original taste coke volumes down around 3% with growth in APS offset by Europe. But obviously, you had very strong growth in your Zero Sugar and Diet Coke portfolio. Just be interested, Damian, to get your thoughts on -- obviously, you've got a lot planned for Q2 and beyond World Cup activation, the new can format for Coke. I'm just interested to get your thoughts on how confident you are in that sort of original taste volume picking up as we move through the year? And whether actually some of the growth here was being cannibalized by the low sugar part of the portfolio? And then just one follow-up, I suppose, on that potentially related is just on Easter and Ramadan. If you were able to potentially quantify how much of a boost that was or if that had any impact on this coke picture?

Yes. Thanks, Matt. So I mean, there's a couple of elements to your question that I call out. So I would say, absolutely, our sugar-free offerings continue to accelerate. So we see that across all of our brands, but particularly led by Coke Zero. And then also, we see Diet Coke, as I called out, continuing to benefit from more focus, more investment. And again, we've talked about that last year that we see those 2 brands as being key to our midterm growth. So it's great to see Diet Coke and Coke Light responding. On Coke Original Taste, I mean, there's a couple of dynamics I'd talk to. One, the brand is performing really strongly, particularly in single-serve and smaller pack formats. So we are seeing some of those revenue margin and growth management moves, working, whether it's mini cans, small cans. Clearly the half liter can where we have it's performing really well, although it's very early days. Most of the volume weakness has been on large PET, and that's been a trend for a number of quarters now. Some of that moves back into Coke Zero, which is great, and some of it moves back into smaller packs in terms of frequency and convenience. So we'd expect that trend to continue, which is why we continue to look at building out whether it's Coke Zero Zero or Cherry on our Zero offerings, but also supporting Coke Classic with flavor innovation as well. So a lot of our markets for the first time, you'll see a bigger focus on Coke Original Taste Cherry and some more innovations on Coke Original Taste because that brand also responds really well to innovation and excitement. It will lead our FIFA campaign as we get into the summer, and will remain our flagship brand across all of our innovations. So yes, I think it's long term, really good to see the category in robust health driven by sugar-free as we've talked about the taste quality of our sugar-free propositions now, it's just excellent, and we see consumers continuing to respond to that. So as we look at guidance for the full year, as we look at our midterm guidance, that dynamic, we will continue to factor into our numbers, Matt, because particularly in our developed markets, we see it as a very healthy dynamic.

We'll now take our next question. This is from Simon Hales from Citi.

Damian, could you just talk a little bit more about the channel performance you saw in Europe through Q1 and perhaps what we've seen into Q2. Obviously, a bit of a slowdown in away-from-home or pickup in at-home. I understand that's probably a function of the Easter timing impacting. But have you seen a return to more of the long-term trends we've been seeing more recently, i.e., a firmer away-from-home the offtake trend as we've come into April. Just interested in your thoughts on how we think those different channels should evolve over the coming quarters.

Yes. We're not seeing a significant change in what we saw coming out of last year, Simon. I think the -- clearly, the Easter occasion, particularly in Europe is a much more at-home occasion. So we do overindex on large packs. That also flowed into our revenue per case performance as well. But that's quite normal. It's a very big period, particularly for markets like Germany. So we continue to focus heavily on away-from-home. We are enjoying a little bit of good spring or could I even dare say early summer weather in Northern Europe. That's definitely giving away from home a boost as we get into April. But clearly, it's a channel that performed well for us last year on the back of solid investment, whether it's coolers, new customer wins. And a lot of that product innovation we talked about, particularly in energy is also supporting our away-from-home growth. So yes, nothing to read into in Q1. Clearly, away-from-home key focus period for us now is really -- in Europe is in the next couple of quarters, and we're well set up for a strong performance as we get through the summer.

Next question is from Richard Withagen from Kepler Cheuvreux.

I have a question on Europe. How should we view the price mix in Europe? We had obviously Easter and the large pack they had an impact in the first quarter. So maybe you can talk about what is the underlying trend? And should we assume any pressure on price/mix in the remainder of 2026, given the inflationary pressures in Europe from higher energy prices?

Thanks, Richard. Yes, so we were pleased with quarter 1 in terms of an overall revenue growth of 9.8% in total, and I'm pleased as well with the makeup of it. So obviously, the biggest proportion was from volume with the extra days at just over 8%. Within the mix, we saw quite a few different factors. So we continue to see the very positive brand mix that we saw last year, fueled by energy. We did see some positive package mix, but it was offset because of the impact of Easter, which as we just talked about, is more of a future consumption multi-serve occasion at home. So generally a lower revenue per case. But nevertheless, when you add that with the brand mix, we did overall see positive mix. And we did see a slight headwind from country mix with GB and Germany growing slightly faster and the slightly lower revenue per case versus the other markets in Europe. And then we did see some headline price and benefit from the sugar tax in France last year. So happy with the makeup. As always, I think it's a bit dangerous to look at 1 quarter in isolation as the promotional program does move around. But as we look at the year as a whole and given what we see today, including the impact of the Middle East crisis, we continue to see a balanced makeup of our 3% to 4% revenue growth for the year with a nice split between volume, mix and rate.

And the next question is from Nadine Sarwat from Bernstein.

Forgive me for the predictable question, but I'm sure a lot on the call are wondering given the news last week on the Pepsi bottling agreement to change hands in Denmark and Finland in 2029, can you talk to your ability and/or desire to get those Coke markets and perhaps a refresher for us how these discussions with Coke have worked in the past for you when it comes to gaining new markets?

Yes. Thank you. We were expecting that question. So thank you for asking it. We've talked a lot about our broader ambition to become a bigger bottler in the Coke family really since we started over 10 years ago. And that ambition remains constant. So as we think about what we can do to make that happen, clearly, performance is key. So we remain very much focused on performing where we've got the bottling licenses. And I think our Q1 numbers reflect that. The second is obviously our balance sheet and capital allocation framework retains the capability to do a transaction. So we're in a good place financially. But ultimately, it comes down to having conversations with the Coca-Cola Company about how they see the future of those markets and if CCEP can play a role in really unlocking value for the company, obviously, for our shareholders, but most importantly, for the consumers and customers within those markets. I mean we believe -- we're well positioned with our other businesses in the Nordics to do that, and we'll continue to keep a close eye on developments about what happens after those announcements last week. And again, obviously stay close to our biggest partner, the Coca-Cola Company to see how their view on those markets evolves. But as always, not just for those markets, but for other bottling franchises that may present themselves of an opportunity, we remain with a healthy appetite and a humble desire to try and continue to grow the CCEP family.

Next question is from Lauren Lieberman from Barclays.

I wanted to just talk a little bit about price pack architecture plans. I know Damian, there's a bunch of information on this in your prepared remarks. But just thinking about the consumer environment, concerns around European consumers kind of in the context of the Iran war and higher energy prices. Just any adjustments that you may be making on that front? And then part and parcel of that is GB was really strong this quarter. And I know you mentioned Zero Sugar, Diet Coke and Monster. But anything you can share about the end market execution that were maybe key accelerators in the momentum this quarter versus that low single-digit volume number that you put up last year?

Yes. Thanks, Lauren. So maybe first to GB, I mean, I think the team have had a number of really strong quarters. A lot of what we talked to last year also benefited Q1, where we've had a lot of good execution improvements and customer wins in away-from-home. That's definitely supporting our growth and will continue for the year. Good brand pack innovation from both the Coca-Cola Company and Monster, that's definitely helping. And we clearly continue to invest behind our brands in store. And obviously, that's featured around Diet Coke, but particularly Coke Cherry. So we had a big push around Coke Cherry in Q1, and that's definitely helping us as well. So yes, I think GB has had another great quarter, and we're well set up for another good Q2 and into the rest of the year. So a lot of innovation and a lot of good execution. Back to your first question, I mean, we've been for a number of quarters now, balancing price, value relevance to our consumers on the back of previously cost of living pressures, now cost of living due to energy. Obviously, as we come out of winter, while they remain a concern, it does get a little bit easier in Europe, particularly on the domestic front, as Ed talked to internally and with our suppliers, we're managing those higher fuel costs through to the end of the year. So as you know, in Europe, market by market, it's quite different, but we can have up to 30% to 40% of our retail volumes on promo. So we already have quite a, I would say, high level of investment against that need state of value. But as always, we'll continue to look at that as we go through the year to see if we need to make any changes. On the other side, in some of our markets, we'll also look at whether pricing in the latter part of the year is also going to be part of our plan as we also look into 2027. So we're balancing both sides of that equation, Lauren, at the moment.

Next question is from Charlie Higgs from Rothschild & Co Redburn.

I wanted to dig a bit more into the Philippines performance, please. I think it picked up quite nicely in Q1. What's been the driving force? Is it still trademark Coke? Are you seeing some good success with expanding the sparkling flavors, Predator, ARTD? And then how are you thinking about energy shortages in the Philippines? I think from memory, your partner there has a very good energy business. But are you seeing any impact at the consumer level or in your distribution supply chain?

Yes. I mean from a -- I suppose to answer the last part of that, Charlie, from a kind of to Ed's point earlier, we've been very focused on continuity of supply, and we have that in the Philippines, and we're in good shape there. We are obviously keeping a very close eye on what's happening with the consumer and the higher fuel prices and how that may impact spending. We have a very affordable proposition, as you know, in the Philippines anyway, particularly led by our GB. So we plan to maintain that through the rest of the year, and that really gives a good entry point. So if consumers come under even more pressure on energy or utility bills, I think our affordability strategy will definitely help us. I think broadly speaking, beyond that, the Philippines continues to benefit from a really strong route to market. We're also unlocking some of the supply chain bottlenecks. I mentioned in my statements, it's a bit away, but we'll have our greenfield up and running next year. But since we took over that business, as you know, we've put in a lot of capital, both in terms of manufacturing, but also in terms of bottle floats. And I think that's just unlocking volume as well for our sales teams. And when I speak to Gareth and the team there, it definitely makes our sales team's life easier having RGB in particular, at a good stock level. Yes. So we expect that to continue. It is a market where we'll continue to look at energy contingencies. But so far, we've been in good shape, Charlie.

Next question is from Robert Ottenstein from Evercore ISI.

Damian, I was wondering if you could give us an update on your implementation of artificial intelligence tools, kind of where you are in the journey, maybe surprise learnings? And also more specifically, is this something that you see eventually integrating with some of your major retail partners and helping grow the entire space, optimize shelf sets and any green shoots along that front?

Yes. Definitely not happening in that space. And maybe just to call out some of the areas that we're utilizing in and seeing benefits. I think we talked to these before. Certainly, in the planning and forecasting area, I mean, we're getting a much higher degree of accuracy around planning. And obviously, that allows us to do a lot in terms of asset utilization, inventory levels and customer service levels. So that's working really well. Like most companies, and I'm sure you hear this in other calls, tools like Copilot we've rolled out across our business to make everybody's job easier and to lean into AI to see what we can develop and learn more from. Beyond that, it's clearly part of our partners' tools, particularly with Salesforce and ServiceNow. We use a lot of their kit and embedded in that now is AI functionality. So we are benefiting from that. I would say where I would like us to continue to get better at is really around the trade promo optimization. I mean that's a big value pool for us. As I mentioned in my comments to Lauren, we do invest a lot behind promo and value, and we continue to learn using AI on how to use that more efficiently and effective. But while we've been using it, I would say we're at the beginning of that journey, and that's super exciting. And the tools are getting better, which will allow us to continue to leverage that big investment year-on-year. So it's touching on all aspects of our business. We are using it with customers on a couple of levels. One, a number of our customers provide us with outlet level sales information. So there, we can really quickly in-store look at that data, manipulate it and then to your point, play it back to fairly basic conversations around [ share of shelf ] cooler space, products on display. And as we also look at our promo optimization, we are building in shopper and customer level information. So we get to see what's the impact on household penetration, on frequency and also on loyalty, which is a key metric for a lot of our retailers. So a lot happening, nowhere near, I would say, getting near the end of that journey. As much progress as we've made and as much of investment we've put in, it's still a really exciting journey. While we're not at the beginning, we're probably on the way to the middle, I'd say, and that's quite a bit of way. So a lot happening. We have digital wins in our manufacturing as well as an example of where we're using AI. Yes, so super exciting and something to your point that our customers really want to lean into as well for their business. So it's a great conversation.

And the next question is from Andrea Pistacchi from Bank of America.

So Damian, you touched on the strong performance in GB. The other market that looked very solid is Germany, which has returned to volume growth. So could you give a bit of color, please, on what's behind this performance in Germany? Is it the adjusted promo strategy or more than that? And on the sustainability there of Germany in the remainder of the year? And conversely, France seems to have remained quite soft despite an easier comparison. So could you comment a bit on France, how that is looking?

Yes. I mean I think on Germany, Andrea, we certainly see a big benefit from Easter in Q1. So I would say, while we're really happy to see volume growth return, it remains quite a competitive market, and I see that remaining through the rest of the year. It is great that we did have a winning Easter, both in terms of share and volume. And that gives us momentum into April, but we need to continue to look at some of our price promo architecture in Germany to keep that volume growth sustainable through Q2 and into next year. So yes, a great start to the year. I would have to say a lot of it's Easter driven. So still more work to do in Germany, but we're excited at the progress we could make in Q1. I'm actually pleased with France. We've had a lot of pricing inflation on our core brand there on the back of taxation. As we've kind of come through cycling that, I think the team has done a great job in France. And I was really pleased with the March performance, but also how we're looking into the rest of the year. So I think the tax in France was disruptive, but we're through it now. Germany, a great start to the year, more work to do, but an encouraging start.

And that was the final question. So I would now like to hand the conference back over to Damian Gammell for his closing remarks. Damian, please go ahead.

Thank you, operator. And again, thank you, everybody, for taking the time to join us. I know it's a busy week when it comes to earnings, a busy day. So I appreciate you taking the time. As Ed and I spoke to, we're really pleased, good start to the year with solid underlying volume growth beyond the benefit of an early Easter and a continued progress on our mix.

Critically, we remain the #1 value creator, gaining share in categories that remain really attractive for our consumers and our customers. Despite the uncertain backdrop, we do remain resilient and very pleased to be reaffirming our full year 2026 guidance today. Clearly, as you'd expect, we'll continue to monitor the situation closely. And as always, we'll adjust our plans accordingly.

There's a lot to look forward in the rest of the year, big FIFA activation coming. We've got our Panini stickers and a lot of innovation coming across all of our brands through to the end of the year and indeed into 2027. Dividend are now 50% complete on our 2026 share buyback demonstrates strength of our great business and our ability to continue to deliver shareholder value. So look forward to catching up with you after Q2. Have a great summer and speak to you again in August. Thank you, everybody.

Thank you. That concludes our conference for today. Thank you for participating, and you may all disconnect.

Hello, and thank you for standing by, and welcome to today's Coca-Cola Europacific Partners Q4 and Full Year 2025 Trading Update Conference call.

[Operator Instructions]

I must advise you this conference call is being recorded today. I would now like to hand the conference over to Vice President of Investor Relations and Corporate Strategy, Sarah Willett. Please go ahead, sir.

Hello, and thank you all for joining. I'm here with Damian Gammell, our CEO; and our CFO, Ed Walker, who will make prepared remarks followed by Q&A. Before we begin, our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook. These should be considered in conjunction with the cautionary language contained in today's release as well as the detailed cautionary statements found in reports filed with the U.K., U.S., Dutch and Spanish authorities.

A copy of this information is available on our website on which a full transcript will be made available as soon as possible. Unless otherwise stated, metrics presented today will be on a comparable and FX-neutral basis. They will be presented on an adjusted comparable basis reflecting the results CCEP and our Australia Pacific and Southeast Asia business unit, APS as if the Coca-Cola Philippines transaction had occurred at the beginning of last year rather than in February when it completed. Now over to Damian.

Thank you, Sarah, and thank you all for joining us today. First, I would like to thank all our colleagues for their hard work and dedication to this great business. Our strong brand partnerships and our people continue to drive us forward whilst making CCEP a great place to work. We are executing on our value creation strategy. Over the last 3 years, we've generated EUR 4 billion of value for our retail customers, returned EUR 4 billion to shareholders through dividends and buybacks and delivered a healthy 90% TSO. .

We are a consistent top and bottom line compounder and generate significant cash, enabling core investment and growth. 2025 has been another strong year for CCEP, leading the way in FMCG and creating value for our customers across our markets and in our innovative and growing categories. We delivered robust top line growth, especially in our away-from-home channel and grew market share.

I'm particularly pleased with our progress on mix, which Ed will talk more to later. Productivity efficiency supported resilient product growth, we generated strong free cash flow and grew shareholder returns, all while having laid the foundations for 2026 and beyond, including delivery of strategic portfolio changes, which are now largely behind us.

Across all key financial metrics, full year 2025 has been a record year for CCEP, as we approach our tenth birthday in May for revenue, profit, free cash flow and returns. Revenue reflects strong execution and solid revenue per case gains. Volumes grew in both home and away from home with strong growth in 0s, up around 6%.

This helped offset portfolio changes, softer trends in Indonesia and softer volumes in Germany and France, impacted by the higher sugar tax. The category remains really attractive for our consumers and customers and indeed is as competitive as ever.

Price relevance across all locations remains key with value continuing to play a role for shoppers in our developed markets. In our emerging markets, we continue to focus on entry-level affordability to build the category.

In 2025, we continue to build our total beverage offering, leveraging our diverse brand and pack range and our capabilities in revenue and margin growth management. The NARTD category remains profitable and growing, up around 6% in value terms, that included volume growth with Europe of 2% and APS up 5%. We were the #1 in FMCG with value share of 20 basis points, driven by APS.

OpEx efficiency supported operating profit growth of 7.1% with margin expansion both in Europe and APS. This all supported strong free cash flow of just over EUR 1.8 billion after investing well over EUR 900 million in capacity coolers, technology and digital. And we returned just under EUR 2 billion to shareholders, including EUR 1 billion from last year's buyback program. Ed will cover the financials in more detail shortly.

Our performance reflects our great people, great brands, great execution, all done sustainably. Now I'd like to take a quick look back at each. We were again recognized as a top employer and we welcomed over 100 new colleagues via our new shared service center in Manila, a key enabler for future productivity.

And we're continuing to build the capabilities of our teams. For example, we're accelerating digital and AI training to equip everyone at CCEP with the mindset, skills and the confidence to unlock value from investments in tech and AI. A little bit more on that later.

Now on to our great brands. Just to touch on a few points given the detail in today's release. We started making bolder moves with Coke in both original taste and Zero Sugar with new eye-catching and impactful campaigns. In Diet Coke, we launched This Is My Taste, supporting an improved performance, particularly in its biggest market, GB.

In flavors, new variants and zeros are an increasing focus. For example, Sprite did well supported by the new Green Applix, and new listings. Monster had another terrific year with volumes up nearly 20%, driving share gains of over 200 basis points.

New launches like Juice Real Punch, the runaway success of Landonorris, the enduring success of core variants and more coolers supported the performance. In ready-to-drink tea, the Nestea transition in Iberia was a success, which fused T-Now leading the category. The AOTD category grew by around 10% in value, and we grew share. We introduced multi-packs and launched Bacardi and Coke and flavor variants of the wider offerings and we commenced the transition away from Suntory.

And finally, the sports category continued to perform well, driven by Aquarius in Spain and in Australia. Great execution focuses on selling to more people more often through increased penetration, incidents and spend per trip. With more volume, we leverage our revenue and margin growth management to create more value. delivered every day by our field sales force of over 12,000 colleagues. This slide just gives a few examples. Through amazing displays, social media channels or increasingly via retail media, our own MyCCEP customer portal closed the year delivering a huge EUR 2.5 billion of CCEP's revenue.

We've made great progress with rolling out more Coke and Monster coolers, drive greater distribution and impulse purchase, placing over 75,000 more coolers in 2025. We continue to focus on choice, including premiumization be it through Mini can France in Spain, Mini in Australia or more returnable glass.

And with affordability remaining relevant for more consumers, we're also focused on delivering value for money through extra or extra cans in our multipacks. And now on to sustainability. We remained on CDP's Climate A list for a tenth year. Packaging collection progress continued, including the imminent launch of DRS in Portugal and preparing for GB next year, and we invested in new cleantech solutions via our CCEP Ventures. It's all contributed to our decarbonization journey, proof of which you see here.

Now over to Ed to talk about the financials in a little bit more detail. Ed?

Thanks, Damian, and thank you, all of you for joining us. We delivered revenue of EUR 20.9 million, an increase of 2.8%, with comparable volumes marginally ahead. For the year as a whole, transactions were in line with volume that were ahead in Europe. The trend, however, improved in quarter 4 with immediate consumption of single-serve volumes running ahead of future consumption format. .

We delivered strong revenue per case growth of 2.9%. Over 1/3 of this came from brand and pack mix, which we're really pleased with, driven by areas such as immediate consumption growth, more coolers and the group in Monster. Our revenue per unit case growth also reflected headline pricing and promotional optimization whilst ensuring affordability on key packs and the impact of the French sugar tax increase.

Cost of sales per unit case increased by 2.7%. This reflects our increased revenue per unit case, driving higher concentrate costs to the incidence pricing model and the increase in soft drink taxes in GB and France.

OpEx as a percentage of revenue was 22.1%, an improvement of 40 basis points driven by continued productivity gains. These elements all combined to drive operating profit of EUR 2.8 billion, up 7.1% and an operating margin of 13.4%, an expansion of around 50 basis points, including an improvement in our gross margin.

We delivered earnings per share of EUR 4.11, up 6.2% on a comparable basis. The share buyback drove EPS accretion, though this was offset by the expected increase in our effective tax rate to 26% and the higher interest as we refinance maturing debt at higher interest rates.

Free cash flow remains a key priority, and we delivered another strong result of just over EUR 1.8 billion. This was after CapEx investment of nearly EUR 1 billion in key projects such as new aseptic capabilities, a new canning line at our Queensland sites, the start of construction of a new site outside of Manila, new ARCD capacity, more coolers and the continued development of digital, AI and SAP S/4 HANA.

And our investment continues to deliver strong returns with ROIC up 70 basis points to 11.5%. And finally, we returned EUR 1.9 billion to shareholders, through our dividend at EUR 2.04 per share and the buyback of EUR 1 billion.

Before moving on to talk about productivity and cash, we wanted to highlight a couple of markets. Starting with GB, our largest single revenue market, which has just celebrated its 125th anniversary since the sale of its first coke. GB had a fantastic year with revenue growing almost 6% and volume growth in both channels with away-from-home benefiting from several new customer wins like Arsenal Football Club, follows and.

Our Zero portfolio saw another strong performance from Coca-Cola Zero and Diet Coke supported by Jamie Dornan. This Is My Taste campaign and the Diet Coke and cherry flavor extension. Given the greater size of the energy category versus other markets, GB enjoyed more benefit from the growth of Monster, supported by the launch of more multipacks for at-home consumption.

Another top performer was Dr. Pepper, where a push on 0 and the latest cherry crush variants helped the brand become the fastest-growing sparkling soft drink in Europe. Now to APS and Australia, which delivered top line performance, excluding alcohol, of an impressive 7%, its strongest growth for many years. Share gains in Sparkling, Energy and Sports supported low single-digit volume growth, driven by Coke Zero in single-serve and multipack PT, Monster Ultra White and the new great variance of POWERADE.

We also saw good growth in our coffee brand grinders, which supplies beans and ground coffee to the home and away-from-home channel. While we continue with the transition away from Suntory this year, the new ARCD brands aligned with the Coca-Cola Company are now entering the market, providing a great platform for growth.

A bit more on that later. Now on to efficiency and productivity, where, as you know, we have a proven track record with a consistent reduction in OpEx as a percentage of revenue. Our current program will deliver between EUR 350 million and EUR 400 million of savings by 2028 and is on track.

We continue to optimize our network. During the year, we reduced the number of distribution sites in Germany, consolidated production in Paris into our Greene facility and single-line sites in Indonesia.

And as Damian mentioned earlier, we opened a new shared service center in Manila, enabling us to centralize activities, harmonizing processes and driving efficiency, all enabled by technology. Turning now to cash and the balance sheet.

Another strong year of free cash flow generation with over EUR 1.8 billion, translating into a healthy free cash flow conversion to net profit ratio. And within this, we invested over EUR 1 billion in CapEx and restructuring initiatives.

The strength of our cash generation has driven sustained deleveraging with net debt to EBITDA of just below 2.7x comfortably in our guidance range of 2.5 to 3. Our debt has a balanced weighted average maturity of around 5 years. Given we refinanced around EUR 1 billion per year, much of which related to the acquisition of Amatil when rates were lower, we do expect a modest increase in annual interest expense whilst retaining an overall low average weighted average cost of debt of 2.5%. which brings me on to our capital allocation framework, which is unchanged.

We remain focused on ensuring we maintain a strong and flexible balance sheet, operating ideally towards the bottom end of our leverage range and with a strong investment-grade rating. Our guidance on capital investment is unchanged for 2026. And we continue to remain alert to value accretive M&A should an opportunity arise.

We remain committed to delivering growing shareholder returns. These comprise our annual dividend payout ratio of around 50%, which grows with earnings, and we are pleased to announce a further EUR 1 billion share buyback to be executed over the coming year. Thank you, and now back to Damian.

Thank you, Ed. Always good to hand over after a EUR 1 billion share buyback. So as you can see today, we're delivering strong results, but our focus is also for me on creating and winning tomorrow. We're winning business because we operate in growing profitable categories with meaningful share and unmatched scale and execution across our supply chain and most importantly, our frontline teams. .

Our geographic expansion from Europe into APS provides us with a powerful and diverse platform. We're scaling capabilities, investing behind our brands, with our partners and driving the impact of tech and digital from revenue right the way through to productivity, all whilst executing a multiyear ROIC-accretive investment plan that sets us up for long-term value creation.

And above all, we remain committed to maximizing returns for all our shareholders. A brief reminder of the slide we shared before. Simply put, we are in the right categories. We are well positioned from a portfolio, channel and geographical perspective across 31 wonderful markets. And we've got meaningful share of our core NARTD the largest in FMCG category in retail.

We have the privilege to move, make and sell the world's best beverage brands. We have a total beverage portfolio that addresses all drinking occasions across today. The category is growing, not just in total, but across all subcategories and even more so within zeros. So having a zero option for every occasion and across pack sizes too provides our consumers with a matchable choice making our portfolio more accessible than ever, which brings me on to our revenue, margin and growth management strategy, which, of course, goes way beyond pricing as we continue to balance premiumization with affordability.

We know that value is playing a role for a lot of consumers, but we also know they love innovation and excitement. As a category leader, we take the role of bringing this to the consumer, more taste innovation with new flavors, more pack innovation and more promotional innovation with more wind mechanics and value add.

All of this is brought to life with examples on this slide and those that follow, with plenty more to go for as we become even more sophisticated leveraging data, AI and insights. So now what's on store from our brands in 2026?

Starting with Coke. As I've talked to before, we need bolder moves to drive category volume. 2025 had plenty of highlights. But we've only just begun, and I'm really excited about what is coming this year with almost too much to put on one slide. High-profile activations linked to the FIFA World Cup, and the English Premier League are already in play.

We are continuing to reinvigorate Diet Coke through the exciting Devil Wears Prada Movie sequel. And we have a number of packaging innovations like the Gen Z-focused graphics on the new 500 ml Coke classic can, new retro flavors like cherry float and a new black 007 identity for our caffeine-free platform.

There's also lots to come across flavors and sports. More innovation, including Sara Cherry and Apple is under way for Fanta, focusing on faster-growing zeros whilst stepping into GenZ passion points through gaming platforms. You'll be seeing new packaging for Sprite with an IC explosion of sensory chill refreshment from a new fresh lemon mint flavor.

In sports, we will see new flavor additions in Powerade and new sports packs alongside World Cup activations. And BODYARMOR has just been launched in a variety of flavors in Spain and in New Zealand. I referenced earlier the strength of energy last year with strong share gains and volume growth in a category that has evolved from functional to mainstream with a broadening consumer appeal.

There remains plenty of headroom for growth, and our focus is clear: more coolers, more distribution and more innovation. This includes zeros, continues to drive incremental growth supported by great marketing ads, Lando Norris was the #1 energy SKU in Europe last year in retail.

So let's see what happens with Viking Berry and others coming this year. We're also strengthening in ready-to-drink tea and in our alcohol ready-to-drink segments. Suntory distribution has now ended, positioning us for a stronger, more integrated platform whilst leveraging nearly 20 years of expertise in the category.

While this creates a near-term headwind, it is the right decision for the long term. And more broadly across CCEP, there is so much more to look forward to this year including the launch of Bacardi Spice Roman Coke. The Fuze Tea transition in Iberia have already touched on, which I'm confident will only get stronger from here.

And in Indonesia, Fresh Tea was relaunched with new flavors and a new look. Early days, but the Black Current variant closed this year as the #1 flavor tea, which now brings me on to Indonesia. Indonesia had a challenging year with the macroeconomic slowdown impacting consumer demand, affecting local and international brands alike. NARTD volumes excluding water, were down double digits, and our own volumes were consistent with that trend, albeit with an improving performance in the second half.

Sparkling performed better with an encouraging exit rate supported by zeros, where mix increased from 3% to 7%. Black Tea, however, remained under pressure, although flavored tea continued to perform better. We continue to push on a pace with our transformation as we unlock the long-term opportunity for growth.

We have a strong innovation and brand plan in place, focusing on Sparkling and tea. And we've delivered major network change moving from 8 plants to 5, whilst optimizing our logistics through third-party partnerships. And despite a significant change again in gender, including a new route to market, which I'll briefly talk to next, our people are energized by the changes being made, and we've been recognized again as a top employer status.

Our new distributor-led route to market enables us to expand availability and optimize cost to serve. We've talked to this before. It is anchored in building a robust network of bigger and better distributors, partners with deep regional knowledge and strong ties to local communities, wholesalers and retailers.

These distributors have true accountability, shifting from a service provider mindset to active sellers with skin in the game. We've grown our distributor base from 0 to 182 partners, operating across 300 distribution points now with a sales force of more than 1,700 people in the market and increased by around a quarter. Early results were encouraging, with more distribution points being gained on a sustained basis.

The Philippines delivered another great year despite cycling strong comparable adverse weather unlike Indonesia, they are not immune from some of those macros I talked to earlier. However, revenue grew 3%, delivering record high sparkling value share of 77% supported by customer wins like the 1,300 strong Angels burger chain.

EBIT margins expanded by around 150 basis points, so well on track to its 10% target, driven by profitable top line growth and efficiency delivery. Ed and I were over there last month for the annual field sales rally, and you can really sense the high energy levels and optimism coming into 2026.

We saw solid commercial plans led by trademark where we expect Coke Zero to continue to gain momentum, having grown 20% last year. We're building on the energy opportunity, having really only entered the category recently, and to support our growth ambitions, we both ground on the largest infrastructure investment to date, the new plant in Tarlac just outside Manila. As we've mentioned already, our CapEx investments include digital and tech, and we're investing more than ever in growing our digital capabilities and the use of AI. AI, particularly machine learning has featured widely across the business for many years, but it is accelerating.

We're focused on areas in commercial supply chain and shared services designed to unlock growth, improve operations and enable smarter, faster decision-making. This includes optimization of promotional spend and enhanced demand forecasting to help drive growth and deliver better customer service. But also, AI in our operation is helping to maximize our asset utilization, whether looking at production schedules or assessing the impact of introducing new products to our network.

We're also transforming how commercial teams access customer insights. First, through a significant investment to unify our data and now by using GenAI to allow faster access to complex queries under diagnosis of performance. Agentic input is a potential game changer for our sales force, and we have a couple of applications using agents. Our goal is to embed it in shaping and enhancing customer contact and support.

Driving data and AI across CCEP is not simply a technology challenge, of course, fundamental to all of this is exploration and learning. Our AI incubator allows us to gather and prioritize ideas from the business, creating an environment to experiment and test solutions before committing at scale.

And as I mentioned earlier, we're getting our people ready, rolling out digital and AI training at pace for all CCEP roles to really change mindsets and ways of working. And all of this feeds into our midterm objectives, which remain unchanged. They reflect our covenants in the business.

We believe that the top line guidance of foreign revenue on profit is sustainable and achievable over the midterm. It provides the framework for us to invest in our business for growth, making us an attractive multiyear creation story, which brings me on to our full year 2026 guidance, reflecting our current view of market conditions, touching briefly on areas by exception.

We remain resilient operating in vibrant categories, even though the consumer environment remains challenging. In that context, we expect revenue growth of 3% to 4% driven by volumes and revenue per unit case. This also reflects the Suntory exit impact. We expect cost of sales to grow by around 1.5% per case. As you know, our concentrate costs are tied to our revenue per unit case growth.

On relatively benign commodities, we are approximately 8% hedged for full year '26. We do continue to see inflationary pressures in labor within manufacturing partly offset by our efforts on efficiency. All other metrics remain the same as last year. And our new 1 billion share buyback program will commence imminently to be executed over the course of the year.

2025 has been another solid year for CCEP, and I look forward to the same again in 2026, our tenth birthday year. We have a fantastic total beverage portfolio, and we're operating in growing categories supported by strong relationships with our customers and our brand partners. Our innovation pipeline is bigger than ever before, and we remain focused on value and affordably in Europe. Not everything is perfect, of course, we continue to learn with even more focus on zeros, driving more innovation at pace, bringing more magic to Coke original taste, and adapting even faster, leveraging tech to strengthen our pricing and promo efficiency.

This is all backed up by investments. We're investing more than ever in top line growth and greater productivity to drive those expanding operating margins. Portfolio changes are now largely behind us, and we look forward to a more normalized outlook for the Philippines and an improving outlook in Indonesia.

Our full year 2016 guidance, combined with the growing dividend and a further 1 billion of share buybacks demonstrate the strength of this great business and our ability to deliver attractive and consistent shareholder value.

Thank you for your time. Ed and I would now be very happy to take your questions. And I'll hand the call back over to you, operator.

[Operator Instructions]

We'll go ahead with the first question. First question today is from Sanjeet Aujla from UBS.

A couple for me, please. Damian, I was wondering if you could just go through how Europe played out through the quarter, in particular, the exit rate through December? And it seems like the headwinds are really in Germany and France. What are you doing in terms of your commercial plans for 2026 to get those businesses to stabilize or growth? My follow-up is really for Ed on free cash flow guidance. I think you're talking about at least EUR 1.7 billion, that would imply maybe flat to slightly down on the 25 base despite another year of talking about 7% EBIT growth. Can you just help us square that, please?

Sanjeet, yes. I mean if I just look at the quarter, I mean, clearly, we exited it really well. We had a very strong Christmas campaign in Europe and summer campaign across Asia Pacific. So really happy with the momentum. Really happy with the execution we delivered in store, had the benefit to be it in a lot of our markets and with more pallets on floor, more coolers and more product available and really strong pack communications.

So I think this year, we really stepped up with the quality of our communication. So quarter started a slow, but clearly gained momentum as we got towards year-end. Yes, you're spot on. If you look at Europe, I mean, a lot of our markets were ahead of our expectations in 2025.

Obviously, GB being the standard. And then on the other side of the equation, clearly, France and Germany were more challenged. I think the French situation is more transparent. Really, we had that tax increase on Coke Classic, which is a massive brand for us in France.

To be honest, the brand performed stronger than I would have expected given the size of the tax that we passed on to the consumer. So that was a positive, albeit it still was a drag on volumes. Clearly, as we move into 2026, we've got a number of activities going on in France. One is a continued push on our great Zero portfolio. There's still a big opportunity in France around zero and sugar free. And then also, we're looking at our brand pack architecture around Coke plastic given that new tax and trialing some smaller pack variants to hit better price points, but also looking at value on our large 1.75.

So more to come on France, but I would say very transparent. Yes. Clearly, Germany was the other market. Really, we had a better second half in Germany, but clearly, the first half was quite difficult, mainly driven by higher promo prices, Sanjeet. So what we've seen is a number of our customers took up some promo pricing above levels that may be for the consumer, given some of the macros proved a bit more challenging.

We did reinvest some more money and value in the second half of the year into Germany. That certainly helped. But obviously, making up for a slow first half was challenging as we go through. But again, the exit rate in Germany, I'm pleased with, also pleased with the plans we have in place around that promo value proposition as we move into 2026. And Ed, do you want to talk about...

Yes. Sanjeet, Yes, on free cash flow. So we're very pleased with 2025. We delivered over EUR 1.8 billion. And '26, we're guiding to at least EUR 1.7 billion, which is in line with our objectives. We are investing a little bit more on a net basis in CapEx in 2026 and 2025. And we see -- because we see opportunities to invest strong business cases with great returns.

So we don't really want to constrain our ability to invest by quoting #2 on the free cash flow. So we think EUR 1.7 billion is a good number to start the year with. Obviously, we'll review as we go through the year and shouldn't improve, we'll let you know.

We'll now move to our next question. And this is from Bonnie Herzog, Goldman Sachs.

All right. I had a quick follow-up question on Europe. I guess wondering how big of a tailwind you're expecting from the World Cup? And any early sell-in ahead of the events as you work to increase activation? And then I got a question on your guidance. Your top line guidance this year is just slightly below your medium-term targets. So just hoping to hear a little more color behind this and maybe the key puts and takes? And ultimately, what are you expecting in terms of the balance between volume growth and price mix?

Bonnie, yes. So maybe just to start with, yes, World Cup. I mean, as I hopefully demonstrated in some of the slides I shared this morning, we have a fantastic calendar of activity starting now. So if you're actually in our markets now, we've really tried to bridge the World Cup all the way through to the event itself.

Also, we've got obviously the EPL, which is a massive asset for us in GB. So World Cup activations really starts now. We're all the way through to the event in July. So lots of unpack activity, lots of win activity. I mean one point I touched on, as Ed mentioned it, we recognize value has been a key need for some of our consumers. What we really recognize that excitement and innovation is absolutely essential.

So while we will offer value, we also know there's lots of consumers who want to engage with brands like our brands, but give them something a bit more, whether that's more on taste or package innovation or particularly more on great consumer promos.

So winning tickets, guessing the goals at the Premier League having a chance to secure only Coke can assets for us is going to be critical as we build out FIFA. So from a consumer engagement perspective, we've got super plans right away through 2026. From the guidance side, it's really reflecting what we talked about in 2025. I mean, broadly speaking, if you look at the exits that we're dealing with in the Suntory space, very high revenue products.

And effectively, when you put all that together, it's about 0.5 to 1 point of growth, right? So there's nothing else really beyond that and that we're just reflecting that in our '26 guidance because we know we'll be through '26. Beyond that, if you look at our performance last year, it was bang in line with our midterm guidance.

So we still feel very confident about the 4%. And as you can see from our activity calender, there's a lot to support that and potentially, as we move forward, look to embed it with a lot of innovation coming down the line. So nothing more really on guidance. It's just a pure reflection on the changes that were already in the middle of. Ed?

And then, Bonnie, on your question about the shape of the '26 revenue, so we're expecting about 1/3 from volume, 1/3 from mix and about 1/3 from price. So we're very pleased, as we said earlier, in 2025 to see mix come back and play such a prominent role in the revenue growth.

And we're looking forward to seeing that continue into '26. And as we talked about earlier, I mean, volume growth is critical for us in the long term and certainly the plans from a marketing and consumer and innovation perspective are all built around that volume growth for '26. So we expect about 1/3 of 1/3 for this year.

And maybe just to build on Ed's point because I think it's really exciting. We've put a lot of effort into reenergizing away from home. We talked about that, I think, on all our calls last year. We put a lot of effort into more cooler placements. So it was a record year for us in 2025. And it's great to see that coming through in the P&L through mix. And we know that a sustainable 4% will be a healthy mix of top line volume, reasonable pricing and brand and pack mix. And that brand on pack mix settlement was very strong in '25, and we're really happy to see that coming through.

We'll now take the next question. This is from Edward Mundy from Jefferies.

So just a quick point of clarification and then my question. So the clarification is that like the last 2 years or so, there have been quite a lot of sort of one-off technical portfolio changes, Capri, Fuze Beam. If you back all these factors out, what do you think your underlying growth would have been the last 2 years? And then my question is really around the changing of the guard at the Coca-Cola Company. We've seen this both in Europe with and then in Atlanta. What do you think this mean, if anything, for CCEP's next chapter?

Thanks, Ed. I mean we'll get a more accurate number than I'm going to give you, but all of the work we've done in terms of backing out all of those changes you talked about, which, let's be honest, will set us up for a stronger platform going forward. It's between 0.5 and 1 point of growth, right? So if you strip that out, we'd be bang in line with our midterm guidance.

And that's what gives us confidence in reiterating our midterm guidance today. And also, we've just decided to reflect that in the 3% to 4%, bearing in mind, we already know that for a period of this year, we'll be at the final phase of that exit. When you strip it all out, that's what gives us a lot of confidence for '26 and beyond. We get bang on that 4%.

And I think that's a great number given everything else that we're looking at. On your comments around the Coca-Cola Company and the system, I would say change is good with both Enrique coming into roll. And then as you mentioned, Louise in Europe, it's always a great time for us to get executives who've had experience outside of our markets coming in and looking at how we do things.

Obviously, they learn, but also they can challenge, bring new learning from different geographies. I think that's one of the strength of the Coke system is that we can lift and shift and learn from different parts of the world. And as we've got a very diverse group of markets now from very developed emerging right of way to to developing, having executives like Enrique and Louise, who worked in multi-jurisdictions really helps us. So overall, those changes are good, brings new energy. And as I said, really new curiosity and learning and I always think that helps any business.

We'll now take our next question. This is from Matthew Ford from BNP.

My question is just on energy. Obviously, you saw a very, very strong performance, 19% volume growth from energy in the year and you had various innovations. You've spoken in the past and today as well around the strong innovation pipeline next year and beyond. But obviously, the 19% growth was quite a bit stronger than we've seen over the last couple of years in the business. How are you thinking about the kind of the quantum of that growth next year and beyond? I mean, should we be expecting a similar level of growth? Or would you expect that to moderate after what was potentially a particularly strong year?

Yes. It's been a fantastic category for us over a number of years. Some of that CapEx and cash that Ed talked to, has gone into some more accounting lines to make sure we're ahead of the demand. So that's a really nice problem to have bottler, to be honest. I expect that category to remain in its kind of 2- to 3-year cadence of mid-teens.

I think there's no reason why we don't see it on the back of a number of fundamentals. One, we still have a job will work to do is about in terms of distribution and bringing those brands to more locations on the back of higher cooler placements.

The Monster organization is doing a fantastic job bringing really strong innovation, and we see that. I think I mentioned when we last spoke, I enjoyed a visit to our innovation lab and had a view of the innovation, not just for '26, but for '27 and our thoughts on '28. So that's going to keep coming.

So all of that gives me confidence that the energy category will remain the leading NARTD growth category. We're well positioned. We're a share leader or very close to share leadership in all our markets. And on the back of that, I see those growth levels being maintained. Will it be another year of 20-plus percent? Who knows? It certainly has the potential. Will it remain at that mid-teen growth level? I see no reason why not.

I think one thing that's very encouraging as well is that about half the growth for energy each year comes from the core and about half the growth comes from innovation. So I think that's very healthy. It wasn't the '25 was just built on innovation and is a one-off. So yes, I think to Damian's point, we see the no reason why the trajectory won't stay the same.

And zeros are playing a much bigger role. So -- which also, I think, gives it more accessibility to a different profile to consumer and the taste profile on the zero products is fantastic. So yes, a lot to be positive about that.

We'll now take the next question. This is from Nadine Sarwat from Bernstein.

Two questions for me, one on the quarter and one bigger picture. So on the quarter, good to see you guys call out moderating volume decline in Indonesia in the fourth quarter. Could you perhaps provide some more color as to what's driving this and how Q1 is going so far and what your guidance for the full year bakes in for the country?

And then my second bigger picture question as you called out in your presentation, revenue growth management has been a hugely powerful lever. You guys have been able to utilize to deliver of top and bottom line growth. And in your mature European markets now, how do you view the potential for further revenue growth from this lever that you have? Is all the low-hanging fruit achieved in these mature markets? Or do you see continued significant opportunities? And if so, could you give us a few examples?

Nadine, thank you. Maybe I'll start with your second question, on the whole revenue and margin growth management. I see immense opportunity going forward. I think we've done a lot. But if you look at our results over the last number of years, '25 stands out has been the first year in a while, where we've seen mix really coming back into our revenue delivery, which is fantastic. Some of that's channel mix, particularly with away-from-home performing well. Some of it is category mix as we move into ARTD. But a lot of it's coming from smarter decisions around pack pricing, pack offerings, whether it's mini cans, small PET.

So when you look at the options beyond that, there's still a lot out there that we can make for. We've got massive manufacturing flexibility in terms of pack formats and sizes. What we need to do better is run that through some of the AI referenced and some of the analytic tools just to sharpen exactly out at the price point or the exact pack offering. We have an 850 out in trade now, both in France and Germany, we need to review that as an idea to enter small single households.

We've got a 12 pack 300 ML PET in Australia. That's doing phenomenally well. That's only really in Germany and Europe. So we know we've got an opportunity there. We've launched a 500 ml Coke can. So for those of you in the same age bracket as, that was a super was going up. We brought that back. There is a lot of opportunity in revenue and margin management.

And I haven't even touched on, which is my personal passion how we spend our promotional money. That can be a massive driver of value and mix accretion going forward. We're getting better. But as I've called out, obviously, our decisions on promo in Germany didn't work last year. And we've seen that impact our business.

So we know we can continue to get smarter on what is a lot of cash that we reinvest with our customers behind promo points. So in some ways, we're not at the beginning, but certainly, there's a long way ahead of us in terms of MGM.

We deliberately included margin in that capability a number of years ago, because we do think revenue growth for revenue's sake may be good. Revenue growth with margin is great. So -- and that's what we're really focused on with our teams.

On Indonesia, definitely a stronger finish to the year, definitely a good start of the year. I would just caution that with we know Ramadan is 10 days earlier every year. So our teams in Indonesia now are really looking forward to that key and very special period for all of our consumers and our employees in Indonesia.

And then obviously, we'll have Eid following that. So myself and the team are down in Jakarta in April, that will be able to allow us to look back at our business in terms of the momentum from Q4. Clearly, we see momentum in Q1. What we got to just look at and see is that momentum is sustainable and at what level into Q3 and Q4.

But really happy with our Ramadan execution, really happy with our performance across some of our key packs. To your question on guidance, we haven't materially reflected anything significantly different in Indonesia. We expect Indonesia to grow this year, both on volume and revenue.

That is clear. But the size of the potential we haven't reflected in our guidance. I think it's prudent to get a good few quarters under our belt in Indonesia, and then we can talk a little bit more about how that may impact that top line for guidance going forward. At the moment, I'm just happy we finished the year stronger. We started the year really well. We're benefiting from an early Ramadan, that's been really well executed. And then we'll take a look and see, and take a view on how the rest of the year is performing. The macros look a bit more favorable. Consumers are spending a bit more money. We see Sparkling doing well, as I called out, my tea is still a little bit of a headwind for us, but we cycled through that. So from an absolute volume growth perspective, we should see that coming in '26 and we will be on the back of sparkling.

And the next question is from Lauren Lieberman from Barclays.

First, I had a clarifying question, Damian, you mentioned in Indonesia that you're not anticipating a big acceleration or change in trend for 2026. But I think you said you expect the business to grow. And I think in the presentation, you mentioned that volumes were down double digits. So I just wanted to clarify what's built -- is there an improvement built in or not? And if I'm right in reading the way you presented the Indonesia stats in the presentation?

Yes. For sure, Lauren, there is an improvement built in absolutely, and we see that coming out of Q4 and into Q1. And I suppose it is about comps. When you look at the year we had last year, growing volume in 2026 is in our plan. .

I suppose when I think about Indonesia, I have much bigger ambition and plans for that market in terms of it being sustainably impacting our long-term revenue algorithm. It will help in 2026, but really, it will be probably a single-digit volume turnaround, which is very happy to see and offer a new cost base.

So we're very pleased with that. But honestly, it's the unlocking of that future growth potential that gets me excited. And we will see that in '26. Yes, so we'll be I'll say, turnaround is a word I don't normally use in Indonesia, but I do see big improvements in the end of last year and starting this year.

And I think, Lauren, it's just worth reminding ourselves that from a materiality perspective, from a profit and revenue perspective, it's small for CCEP, a bit more impactful from a volume perspective for sure. But when you look at the revenue, I think the decline this year only had a 0.2% impact for CCEP overall.

Okay. Understood. And then just mentioning earlier that the balance you're looking for the revenue build of 3 each across volume, price and mix. When I look at the second half performance for '25, it looks like that's about where you were. So would you say you're kind of -- is that a fair assessment? Kind of your strike in the second half of the year overall kind of struck that right balance between the 3 elements of organic revenue growth. And then the idea for '26 is just a little bit better across all fronts. Because I know from KO, a huge focus on volume overall through the system this year. But if I look at your performance in the second half, it looks -- overall, again, like your volume is kind of contributing at the pace you might anticipate within the overall revenue build.

Yes. I think as we look into '26, I mean pricing is pretty much where we want it to be. And as you know, Lauren, we talked last year, we did invest a lot in incremental value activity, particularly in the second half. So I think on pricing, we're in a good place, and we're in a good place in value as well, which is great. .

Mix, as we talked about, is also coming through nicely. That's on the back of not just chasing price because, as I called out, I firmly believe that this category is so valuable to our customers and also to our consumers in terms of excitement and innovation.

So we've really got to focus on what grows the category. So flavor innovation, pack innovation, great marketing and consumer connection is key with some value to make sure particularly those shoppers that need it can access our products. And we delivered that in 2025. That will continue in '26.

So you will see a nice balance of pricing that reflects some of those macros, mix that reflects innovation and premiumization and excitement and then obviously, volume coming through as well. And we saw that in the second half of the year, and that's really our model going forward.

The next question is from Andrea Pistacchi from Bank of America.

So I have a question on the operating profit, please. So you've delivered again on the 7% operating profit growth. Despite top line falling a bit shy of expectations, the same in 2024. In fact, you did 8% EBIT growth then. And for '26, again, you're guiding to 7% in line with your mid-to algo, although top line guidance is slightly below the midterm. So with, I guess, a bit less leverage from top line than you would have anticipated. What drivers are enabling you to still consistently deliver on operating profit? Is it solid revenue per case drop-through, the COGS environment, which is I guess, pretty favorable? Or are you having to push a bit harder with the cost savings, please? And did you -- I may have missed it, but did you give a cost saving number at least for 2025?

Yes. So yes, we're very pleased with our '25 operating profit doing 7% despite the fact that the revenue could have been a little bit higher in some areas. It was a great result to still deliver that 7%. It comes from many areas. We talked about some of them already. I think mix was clearly a great lever for us both on the revenue side but also on the profitability side. Strong R&M GM and making sure those promos really work and generate a return, and we end up with a bit better revenue per case than our cost per case in the margin. .

And then also critical is our productivity and transformation agenda. So again, we were delighted that our revenue grew faster than our OpEx in 2025 and continuing that kind of improvement as a ratio of 40 basis points in the year. And we see that continuing as we go into 2026. So yes, very pleased with the profit performance.

I think going into next year, we do expect more of the revenue growth to come from volume as a whole for the year than in 2025. And obviously, although that's still accretive at the profit line, it generates a bit less profit than revenue per case or a pure rate increase. So that's why even with a slightly higher revenue number, we're still at the 7% profit line for '26 in our guidance.

If I may be, sorry to squeeze in a quick follow-up for Damian, please on the the channels in Europe. So you had a strong performance this year in away from home in Europe. And of course, it was a big, big focus for you. Do you expect this momentum to continue in away from home as we go into 2026, how would you see the balance of performance of the channels in Europe?

Yes. I expect it to continue. I mean our investment and strategic intent hasn't changed. That will continue into '26 and into '27 built off what we did in '25 around more coolers, driving more incidents, winning new business and working with the Coca-Cola Company and Monster on driving consumer relevance for those channels, both on pack and in-store. So that's a multiyear program. So I see no reason why that won't continue into 2026. .

We'll now take the next question. And this is Richard Withagen from Kepler Cheuvreux.

On the sports drinks, you're putting more efforts and resources behind those sports drinks that you have the queries, you have POWERAID, body armor. So how should we think about the positioning to different brands? And how do you avoid cannibalization?

Yes. We are blessed with lots of brands that come with some choices. So I think Acqaris is a fantastic brand for us really in two markets, really, Belgium and Spain. Our main sports platform will always be Powerade, and we continue to build that out both in terms of functionality pack sizes, flavors. And then we've got, obviously, large assets like the FIFA World Cup coming. We have a fantastic Powerade business in in Australia and New Zealand that I'd love to keep replicating in Europe. So that will be our main platform. .

I think around that, though, we see that hydration and wellness opportunity even bigger, and that's where brands like BodyArmor, which are quite different in terms of functionality and ingredients to a Powerade and Acquarius. So both of those can exist very well together in the segment, and it's a growing segment. So yes, I think is probably a little bit more niche. We have tried the queries in different markets didn't quite take off as well as Powerade, so be our main platform, and then we'll supplement that with brands that we think can add more value like BodyArmor and clearly keep our great business in Spain and Belgium with. Yes. Good choice to have to make, to be honest.

Exactly. And in terms of the growth drivers of these businesses, is it a lot of distribution gain? Is it innovation?

Yes, it's a little bit of everything. I mean, innovation is key, particularly on the product. So we've got some Powerade zero water. We've got enhanced Powerade. We've got 1 liter Powerade now, so coming to Europe, which is great. That's a pack we've had in Australia for a while.

And then it's clearly -- yes, still distribution, particularly out of retail, but also markets like GB, a great market for us. We really only have 2 SKUs in GB, 2 flavor variants. So when you stand back and look at a business like Australia where you've got multi-packs -- you've got small single serve, you've got 1 liter. And then you compare it to a market like GB, we still have a big, big opportunity.

This is from Eric Serotta from Morgan Stanley.

Two quick ones. First, from a housekeeping basis, you called out in the press release as you have previously the selling day impact for the first quarter and the fourth quarter, the impact on revenue. How are you guys -- how should we think of that in terms of the impact in terms of the profit cadence for the first half versus the second half?

And then the second question, bigger picture for Damian would be clearly nice. You guys clearly had a nice uptick in mix in the ending 2025. I know you said roughly 1/3, 1/3, 1/3 between price mix and volume for '26. Can you talk a bit about the mix drivers going forward? And I guess, what you've been doing to really enhance that mix contribution exiting 2025?

Maybe I'll start, Eric, on the selling days. So yes, the 6 extra days in the first -- in the first quarter and therefore, in the first half, so that does affect absolutely the volume, and we'll see that for sure in our quarter 1 results. I think overall, though, when you look at the operating profit, which is, I think, behind your question, we actually think the operating profit will be fairly balanced for the year. So although we have the benefit of the extra days in the first half, we also have the last bit of the exit from Suntory all in H1.

And obviously, that's a higher revenue per case and a higher profit. So there's lots of puts and takes. It's always on the phasing, but we expect an operating profit pretty evenly phased between H1 and H2.

Yes. And just your second point, Eric, I mean it's a key focus for us in terms of driving mix and it comes across a number of different aspects. So obviously, category mix as we move into NARTD, energy, we talked about BodyArmor on the previous question, we continue to look at categories that generate a better mix. Then you look at channel, clearly, we're seeing the benefit of away-from-home recovering after a number of years, and that clearly is a positive for our mix.

Then we drop into packaging. So generally, smaller is better when it comes to mix. So cans, half liter, we're doing a lot around mini cans, more pack innovation. Then we also got to look at price promo, so making sure our price promo strategy drives mix. And then the last point that I'll keep calling out because I do think it's really, really important is the more added value we can bring to our brands is a real driver of mix.

So when you look at, for example, our half-liter PET pack today in GB, it's got an excellent EPL promo on it. Guess the goals, very engaging, nothing to do with price, pure value add. And clearly, the more we can bring that to the right packs, it's an enhancement on revenue and it's an enhancement on mix.

So I still believe, although consumers and shoppers do struggle for value with cost of living, and we will meet that occasion, and we are meeting that occasion. We can't lose sight of the role we play in terms of bringing excitement, engagement. And for a relatively small price, fantastic tasting products that can put a few smiles on people's places during the day. So value is key. But for me, longer term, continuing to build out the excitement through flavor, through packaging, great taste will also be a big driver mix. So we're very fortunate given the diversity of our channels the categories we operate within, but we have a number of areas where we can really lean on mix to help that revenue growth.

Next question is from Charlie Higgs from Rothschild & Co Redburn.

My first question is just on the Manila shared service center that you spoke about upgrading. I was wondering if you could just expand a bit more on what the remit of the shared service center will be? We saw some very strong margin expansion in the Philippines there. But will it also help contribute to margin expansion more broadly? And how do you see it interplaying with your existing Bulgaria shared service center? And then my second one for Ed, is just on leverage, where I think on my math, even with the EUR 1 billion buyback, you'll still be running at sort of the low end of your 2.5 to 3x range. How do you think about using the balance sheet at the moment? And what are your key priorities when it comes to capital allocation in 2026?

Thanks, Charlie. Yes, very well thanks. And if I pick up your start -- your question starting then with Manila. So we're very excited about the opening in Manila. I think we've already got well over 100 people in the first 8 months. And there's amazing talent in that market. We've been super impressed with the capabilities we found. As we look at the role of the center, it's really to provide global capabilities. So it's not there just to support the APS region. It's an opportunity to centralize more activities and also some new activities using the capabilities that we've got there. .

But it's also an opportunity for us to reduce the risk profile a little bit. We obviously have a lot of activities today based in Bulgaria. And so having multi hubs allows us to spread that risk a little bit. And although it's not a regional center, certainly, it does help from a time zone perspective, and being able to directly contact customers and suppliers in markets like Australia and New Zealand and much more time zone friendly in terms of our employees and also the customers. So we see it as a huge asset for us going forward.

I think, therefore, it won't really impact the margin specifically in the Philippines. I mean it's a global asset. So it's a key part of our overall productivity and transformation agenda. So we'll see it in the delivery of the overall numbers. On the allocation framework, so no change there really in terms of our framework and capital allocation priorities. So we want to maintain that investment-grade rating, and that means keeping that leverage in that 2.5 to 3x. We continue firstly, to generate -- to spend cash the business generates on what we need to do to grow the business. And as mentioned earlier, investing over EUR 1 billion CapEx again in 2026. Absent the M&A, then we return that cash to shareholders.

I think with a EUR 1 billion buyback as you say, we think our leverage will continue to modestly decrease as in fact, it has done in '25 versus '24. And we think that's a healthy way -- healthy trend for it to continue. I think with the current interest rate environment, there's plenty of access to money. We still can borrow at competitive rates.

We think leverage in that 2.5 to 3x remains the kind of the efficient level for our balance sheet. So we expect that to continue.

We'll now take the next question, and this is from Robert Ottenstein from Evercore ISI.

Great. Just one question for me. Damian, you mentioned earlier that how you spend the promo money is a personal passion, which makes a lot of sense. So can you maybe just elaborate on how big an opportunity that is? And also perhaps tie in kind of exactly what happened in Germany and what the learnings from that was?

Thanks, Robert. Yes. If you speak to all of my colleagues, Dave also confirm it is a passion point for a couple of really valid reasons. One, it's a huge amount of money; and two, it has a significant impact on our performance. So it certainly -- it warrants the focus that we're giving it, not just me, to be fair, the whole team. It's a key part of our technology platform build-out, and we have been doing better year-on-year in terms of our promo efficiency and effectiveness, but it's like a never-ending opportunity.

So if you just step back and look at it, we are fully funded from a promo investment perspective. We put a bit of extra money in at the end of last year. We saw that benefiting. So from now on, it's really more about promo effectiveness rather than quantity, and it's just finding ways to use those euros and dollars smarter to get a better return for our customer and also a better return from our shareholder.

And again, that is sometimes live market tests are an easier way to figure out how consumers will respond. We run a lot of analytics, both through Bulgaria. We're also doing the future through Manila to try and model. We've got elasticity survey. So pretty much what any organization in our space will be working on.

If I step back and just talk a little bit to Germany, what we saw last year in Germany was obviously an ongoing macro value environment, which we were playing in, and we continue to play in. But a number of our promotional packs did go above certain price thresholds. And I think that's where we saw a little bit of hesitation from our consumers at those higher price points.

That hesitation can sometimes be -- well, I'm going to wait until the price comes down again or it can be I'm going to buy a little bit less. And that's really what we've seen. So it's more an impact on frequency. And that's something that we're working on with our team and learning from. So yes, when you look at the number of packs and SKUs we have, we've got a very rich opportunity by pack, by brand, by channel, and that's what we keep using.

So I think it's something that will continue to be a key focus of our data and AI. Obviously, in Europe, customers set the pricing on shelf. And some of those dynamics can also be driven by our customers and nothing to do with us. And that's something that we got to deal with. Clearly, the category is super profitable for our customers. And for me, that's the most important. So we continue to get great relevance and great focus from our customers. And they grew their revenues faster than we did last year. And I think for long-term health, that's not a bad outcome. Thanks, Robert.

We will now take our last question. And the last question is from Usama Tariq from ABN AMRO.

Just one quick question from my side on capital allocation. So I heard that you indicated that we remain committed to any accretive M&A opportunity if it comes. If I'm correct, that is one of the earliest times that you have been more positive on it. Can you indicate to me at what scale are you looking into or what geography would you be more interested in? Would it be APS or Europe? And would it be small or big? I'm just trying to gauge your level of interest if an opportunity comes in this year?

Thanks, Usama. Well, that position hasn't really changed at all. I mean, since we created CCEP, we've been always focused on having a balance sheet and a free cash flow that will allow us to consider M&A that we think will make value for our shareholders. I think whether it was the Philippines or previously Amatil. That hasn't changed. And I don't know whether it was a comment or wording, but certainly, there's nothing significantly different in that space as we close out 2025 and look into 2026.

As I said before, we'll always remain curious. I think our performance delivery with the Coca-Cola Company is an essential element of even having the opportunity to look at potential M&A., but we don't really see that in the near term mainly due to the fact of available quality assets. That can change quickly. We always know that, but certainly, nothing has really changed in that space. So if that was one of the takeaways from one of our comments, but that's probably not reflecting the reality. So we're pretty much where we were going into '25, same into '26, focused on delivering the value add of the Philippines, getting Indonesia to where we want it to be and continuing our journey in our other markets around quality top line revenue growth. And if at some stage, a good quality M&A opportunity comes up, we definitely consider it. We've got the balance sheet to do it.

I would now like to hand the conference back over to Damian Gammell for his closing remarks. Damian, please go ahead.

Thank you, operator. And again, a big thank you to everybody joining us today and for your questions. 2025 was another great record year for CCEP. We're very much now focused on delivering a really strong start to 2026 and looking forward to a great summer activation across all of our markets in Europe, and enjoying a great summer activation now in APS.

And as I mentioned earlier, across all of our markets, clearly, Ramadan will be celebrated and we look forward to that as well. So really excited about our brand plans. I hope you got a flavor today of the quality and depth across multiple categories. Excited to see mix playing a bigger role to see that continue. And obviously, we look forward to updating you on our Q1 revenue performance a little bit later on in the year. But again, a big, big thank you, and I wish everybody a great rest of the day. Thank you.

Thank you. That concludes our conference for today. Thank you for participating, and you may all disconnect.

Good morning, everyone. I'm Eric Serotta from Morgan Stanley's beverages, household products and tobacco team. And I'm very pleased to welcome Coca-Cola Europacific Partners back to Morgan Stanley's Consumer and Retail Conference.

Before we begin, please see Morgan Stanley's research website at www.morganstanley.com/researchdisclosures for important disclosures. And if you have any questions, you could reach out to your Morgan Stanley sales rep.

CCEP is Coke's largest bottler by revenue with a strong record of value creation. Joining us today is CFO, Ed Walker. Ed, thanks for joining us.

Thank you. Thanks for having me.

Great. So CCEP is wrapping up another solid year in a pretty tough macro environment, 2.7% FX-neutral revenue growth through the first 9 months. First, can you start by talking about the drivers of this year's growth, whether it's in terms of categories, markets or price versus volume and mix? And then how you see those drivers evolving as we look to 2026?

Yes, sure. So yes, 2025 has been a solid year in what I think is a challenging environment. I'd start off by saying that the category, though, has remained healthy. So soft drinks in our territory has good value growth and actually volume growth as well, which you can't say that for all categories.

For us, we've had some great areas of growth. If I look at the categories to start with, light colas has grown very well, Coke Zero in particular. Diet Coke has stabilized. So in GB, that had been declining for a number of years. We've invested a lot and that has stabilized.

Also Zero Sugar flavors like Fanta, Sprite are doing very well. Energy performed excellently. And I know a number of you were at the Monster event yesterday, and that's been a very strong contributor to growth this year. And then we have growth in stills and growth in ARTD. So lots of individual elements of growth across the categories.

From a market perspective, certainly Australia has had a very good year. GB has had a good year, but cycling some tougher comps from 2024. One of the things we are pleased about is that Away-from-Home has returned to growth in Europe. So after a couple of years post the pandemic, it's now growing in line with the home channel, and that's obviously a very important channel and set of subchannels for us.

So lots of elements of growth when you look across the portfolio. But in '25, we've also had some challenges. I think two types, some technical challenges. So we exited Nestea in Spain and moved to Fuze Tea, which is a better platform going forward. It's been a very successful transition, but that's had an impact on the revenue as we've gone through that.

And then in Australia, we've also had the exit of the Beam Suntory contract in the last 6 months of '25, which is also another headwind. So some technical challenges. And then we've also had some market challenges. Indonesia is one that really stands out where, again, the macroeconomic conditions have really impacted volume.

But then also in a number of our developed markets, the general macro and the consumer sentiment has really impacted volume. And you can see that actually in the most recent market and scanner data. Over the last few weeks, volume has been impacted. So I think, yes, a solid year when you look at the performance in that macro context.

What that means for '26 going forward is that affordability remains absolutely critical. For us, affordability is about getting the right pack at the right price in the right environment for the right drinking occasion.

It doesn't mean prices need to be reduced everywhere, but it means we need to be very segmented and how to address that affordability in those particular situations and also how to make sure we communicate effectively the value for money associated with that.

But we're positive as we look forward because we don't think the macro challenges will get any worse. We're not assuming they will improve, but we don't think they'll get any worse. And we've got some exciting plans from a marketing and innovation perspective.

Makes sense. A lot there. I want to start unpacking it. So since earlier this year, you have pointed to some softer consumer demand and some heightened competition in markets like Germany and GB. You mentioned the scanner data a little bit weaker recently. Could you talk a bit about sort of expectations for the European consumer as we head into the holiday season?

And then what CCEP is doing to kind of tweak your strategy and execution for this environment? You mentioned affordability, but other metrics that you -- or other levers that you might have, promotions, affordability, price pack, anything else to adjust to this environment that we're in now?

Yes, yes. It's quite early to look at the quarter 4 numbers at this stage. And also for us, December is such a critical month with the holiday season. And of course, in markets like Australia and New Zealand, it's also their summer.

So I think we'll get a much better read on the consumer health and consumer sentiment once we got through that holiday period. But what we've seen as we've said in the most recent data is that the consumer remains challenged.

For us, really affordability is about that right pack at that right price. We've learned a lot as we've gone through the year. So activities where you really effectively communicate that value for money are working better. So we've had a lot of focus on extra fill type activities, so 1.5 liters for the price of 2, for example, or 12 packs for the -- 12 cans in a multipack for the price of 8.

So those kind of mechanics really resonate well with the consumer and give that sense of strong value for money and also making sure that we have the right packs for consumers that don't enter the category very frequently.

So real affordability packs. The key price point in Europe is around EUR 1.50 for a multi-serve. So lots of focus on that. We've recently launched an 850 ml PET pack in a number of our markets, and we're doing a lot more on 1 liter and 1.25 liter packs.

For us, as we look at it, it's not, as I said, low prices everywhere. It's been more segmented in our approach, making sure you have the right price point on the packs that make a difference from an affordability, but then leveraging the opportunity where you can take a bit more price, maybe things like mini cans or perhaps in some particular channels or customers where you can afford to take a bit more price to offset what you're investing in affordability.

And as you rightly pointed out, we invest so much money on promotion. There's an awful lot we can do by driving promotional effectiveness using our tools and the insights that we have as opposed to always looking at headline price increases.

And then finally, there's always mix. We can always leverage mix and things like stills, energy, immediate consumption. We are seeing benefits with more people returning to the office and being out and about during the day more, so more growth through convenience. All those mix opportunities as well can help us generate the revenue per case we still need whilst meeting the affordability challenge.

We will continue to take price in all of our markets, but I think it will be more segmented than we've seen in the past. And certainly, as we build the plans for 2026, there's going to be more focus on getting that revenue growth through volume than from revenue per case as we've seen in '24 and '25.

Great. So one of the surprises, at least to me this year is given the weakness in the At-Home channels, particularly in Europe, that one of the bright spots that you pointed to has been a return to growth in your Away-from-Home business. What's driving this apart from the easier comparisons? And how sustainable do you see this Away-from-Home strength as we go into 2026 and have some tougher, more normalized comparisons?

Yes. I mean, Eric, I mean Away-from-Home is a critical channel for us. About 45% of our revenue goes through that channel. So it's very important from the overall business perspective in the P&L. But it's also a critical channel for recruitment of consumers for the future.

A lot of young consumers frequent that channel, and it's a great opportunity to get them into the franchise in early stage. So we're very pleased to see that back into growth in 2025.

It was certainly a headwind for the previous years coming out of the pandemic with less outlets and people really down trading within the channel. So we're very pleased to see what we've been able to do in '25.

We've invested a lot in that area, and it's across the board. So there's a big focus on coolers and I think we talked -- I think Damian actually was here last year talking about the year of the cooler. We're recruiting our sales force in many of our markets so we can visit more outlets more frequently and influence better within those outlets.

We've got big investments in tech in that area, whether it's from our MyCCEP platform, which allows people to order directly through our own platform or through Red One, which is what we use to manage our sales force and they're using AI to better enable the calls and look for that picture of success or even Gen AI to build things like menu makers and better point of sale in the outlet.

So lots of investment in technology as well. And then a lot of work with the customers themselves on how they adapt their offering to meet the macroeconomic challenges. So you see more meal bundling in the channel, better, more exciting meal combinations and again, sort of giving that consumer the value for money.

And we've had some good account wins as well over the last 12 months. So lots of investment, which looks to be paying off. And I think that investment is long term in nature, a lot of it. So that is really what's going to give us confidence as we go into '26 that we continue to see Away-from-Home performing well.

So turning back to pricing, which you touched upon. Yes, Damian has made the comment, you've landed pricing basically every year since CCEP was formed. So you talked about less of a contribution from list pricing for next year. But I guess, what's -- have you started the discussions yet?

I know some pricing goes in early January in some markets. What's been the retailer reception in this market to pricing? I know it's always tough, particularly in Europe and Australia. But what's the early read in terms of pricing and sort of the pricing versus affordability push pull?

Yes. I mean we've had a great track record of always getting price within our markets since CCEP was created. And we've done it without disruption or without material disruption certainly over time. I think the key to that success has been we take a very measured and considered approach when we look at it.

As I said earlier, we look at what's right for the consumer, what's right for the category and the customer, so to make sure the category remains very healthy from a retailer P&L perspective, and then what we think we need from our P&L, but also what we need to do for pricing to allow investment back into the category and the products for the future.

That's the approach we've always taken. And even in the kind of more inflationary years after COVID, we were quite measured in how much pricing we took. And I think that stands us in good stead going forward because I think retailers understand that we look very carefully and only take price where we think we can afford it and where it makes sense.

Certainly, the conversations for next year won't be any easier. They have started. A number of our markets take pricing in the first quarter. But where we are aligned with retailers is the focus on affordability will remain critical.

So back to what we were talking about earlier, making sure for those key packs, you have the key promotions and the key price points and the clear communication of that to ensure we're still bringing people into the category, and we're meeting all of the consumers' needs, those that are most challenged by affordability, but across the whole piece.

At the end of the day, the category remains very healthy from a value and a volume perspective. So the retailers as well are, I think, keen to see us continuing to invest in that category.

As we said earlier, I do think we will take price in every market next year, but there'll be a little less emphasis perhaps on that and more emphasis on volume growth next year and not just headline pricing, but better management of the promo, the mix and all the other levers that we have at our disposal to kind of drive that revenue per case.

Great. So shifting gears, I wanted to dig into the APS, Australia, Pacific, Southeast Asia. Let's start with Australia. Look, the business struggled for a number of years. It was showing some signs of improvement under a lot of the changes that Peter and the team did under Amatil shortly before you acquired it, but clearly took it to a new level under CCEP ownership.

So sitting here today, heading into 2026, can you talk about the opportunities to further improve the performance of Australia going forward, not necessarily in 2026, but over the next few years? And what rate can that business grow at over the medium term?

Yes. Yes. I mean we're super pleased with the Australia performance. I mean, and also New Zealand, Papua New Guinea and the Pacific Islands. I mean the API region has performed extremely well since the acquisition. The Australia business is a brilliant business, and it was before we bought it. But we're pleased with how it's grown since then.

There were a number of things that we did, which will stand us in great stead for the future. The first is we've invested a lot. So we've invested a lot in the supply chain, more regional production and stronger regional logistics, which means we're able to better service customers.

It also means we have a more efficient route to market, and it enables us to really meet the growth opportunity in the market and expand that mix opportunity. Lots of investment from a capacity and a capability perspective. We also addressed some of the price promo challenges that historically have been in the market.

It's a very heavily promoted environment. And I think one of the benefits with CCEP's scale is you can afford to do a bit of a reset in those situations and weather the storm a little bit as it goes through its transition through the trade, but get the pricing and the promo set up much better for everybody going forward.

We've invested in tools and tech, building on the capabilities that we have in Europe but also, I mean, that was not a one-way avenue. We took a lot of great capabilities from the market in Australia that we've applied back into Europe.

And I think finally, and probably most importantly, is a much stronger alignment with the Coke Company. So we did a lot of work with them on the portfolio. We actually sold some brands back to the Coke Company, you might recall, and really made sure we were clear for every brand within the portfolio, what was its role, what we were trying to do with it from a consumer perspective. And so much, much stronger alignment.

So all those things have really set us up for the future. And I think that's why we've had a great couple of years, and that's why that will continue into '26. That market, we think, should grow consistently in the kind of 4% to 5% revenue perspective, and that should be a healthy mix of kind of volume and revenue per case.

Lots of exciting opportunities from a category perspective down there. Things like the sports category is extremely well developed, a great energy portfolio. We're going through the slight headwind this year of the alcohol exit from Beam Suntory. So that will phase out by the time we get to the half year point in 2026.

But we actually think the current approach with the Coke Company and the partnerships we've been able to build and put in place there will actually set us up for a stronger ARTD portfolio in the long run. But that's obviously going to take some time to cycle through and then build up. But yes, 4% to 5% revenue growth is very achievable in the long run for Australia.

Great. And then Philippines has been a fantastic market since you acquired it almost 2 years ago, notwithstanding some of the weather-related disruptions last quarter. I had the benefit of attending your event in Manila, and it was really eye-opening the opportunities there.

But maybe you could distill 3 days of presentations into a 3-minute response here as to discussing some of the opportunities for CCEP to further build on the business in the Philippines and sort of the revenue and margin potential as you leverage scale across the broader Southeast Asia APS footprint.

Yes. I mean, Philippines is a fantastic market. We think of it as a developed Coke market, a very developed soft drinks market, operating in a broader emerging market.

So you get the best of both worlds, very well-understood soft drinks proposition, a real love of Coke and the Coke brand, but then all the benefits of those kind of macro drivers in an emerging market with a growing population, growing disposable income within that population. So it's a real sweet spot from that perspective.

It's always been a great business. What we've been able to do to really leverage that potential is to invest certainly in meeting all of the demand. So that had been a bit of a challenge in the past. So we've put a lot of money into the supply chain.

We've actually just broken land on a brand-new greenfield facility north of Manila, which will be one of the biggest plants in the Coke system when it's completed. And it also allows us to really leverage all the mix opportunities. So it's a big RGB market, but there's a lot we can do with single-serve PET, a lot we can do with things like cans.

We can further expand the water opportunity through this capital investment. And of course, all this capital investment is state-of-the-art machinery, replacing some very old assets that we have. So it also drives a lot of improvement from a margin and efficiency perspective.

We've done a lot of work on tools and tech and really investing as well in capabilities, particularly for the modern trade, where some of our R&MGM capabilities from Europe or Australia, New Zealand can really be applied now to the modern trade development within the Philippines and really giving them as well investment in making the whole business more efficient going forward.

So that means I think we'll continue to see great growth on the top line from a category perspective, high single digit is what we're planning on the midterm, but even more growth on the bottom line.

And we've already seen great margin progression. It was about 6% when we acquired the business. We're thinking we're a couple of years away from a 10% margin. And there's no reason why it couldn't get up to the average that we have across the group. So very, very exciting and lots of long-term potential in the Philippines.

Great. And shorter term, is the business back normalized after the flooding and the typhoons back in the third quarter? Are we at sort of a normal rate now, fully recovered? Or I know some of these markets take an extended time to recover.

Yes. I mean we look at these weather events very carefully. I mean there's always weather in the Philippines, in that part of the world. And they've built up an incredible resilience in how to adapt to that.

And I remember when we first saw the -- back in '24, the first typhoons and we saw the extent of the damage and the flooding, we were thinking it's going to take months to recover. And then within a couple of days, they're back up and running. So they've got incredible resilience and ability to bounce back.

Yes, the business is now fully operational after those events. You do take the hit in terms of the volume because what you don't sell from a consumer perspective, you don't really recover.

But as we said, there's always weather in that part of the world. I think what we've seen more of this year in the Philippines is more of the macro impact and in general, a little bit of a slowdown from an economics perspective.

There's a lot of data points that support that. Remittances are down across the market, better than some other territories in that region, but we think that's probably had a bigger effect on '25 than the weather. So back up and running and looking forward to a good Q4.

Great. And then Indonesia, one of the most attractive markets from a longer-term standpoint, demographics, GDP growth, underdeveloped sparkling category. But obviously, you've had, first, the geopolitical headwinds and more recently, the macro headwinds. I believe you said that the RTM, the route-to-market transformation will be sort of wrapped up around year-end.

So I guess what's next on the agenda for Indonesia? And then how are you thinking about the long-term growth and margin potential for the business? And I guess, what can you really expect over the next 2 to 3 years?

Yes, yes. So Indonesia is -- I mean, it's a fantastic opportunity for the long term, and our view on that certainly hasn't changed. When you look at the characteristics of 300 million-plus people, relatively low average age across the country, not a lot of alcohol is consumed, it's almost your perfect soft drinks kind of environment.

So a huge opportunity for the long run, but very frustrating one to crack. So yes, in '23 and '24, we saw the impact of the geopolitical situation impacting demand in the country, and we could actually pinpoint that quite clearly because you could see very different demand across the region. We don't think that's got any worse, but then for '25, we've been hit more by macro -- the macro perspective.

And you see those impacts across multiple categories and across local players, so not just a kind of a geopolitical challenge against Western -- with Western brands. So we hope that we're coming through the end of that yet. I think it's a bit early to say that we've bottomed out in terms of that.

But we haven't been wasting the fact that the top line has been -- wasting time while the top line has been down, and we've done a lot of transformation in the business. So as you rightly said, we've totally transformed the route to market.

That's just now been completed for Jakarta. That was the last region. And we've done a lot on the supply chain. We've reduced the manufacturing footprint, taken out 3 sites. We've done a lot of transformation in the back office. So the business is a lot leaner and more efficient now going forward. So much better placed for when that demand does start to react to it.

I think what's important for us now going forward into '26 is what is the right pack price combination. And we're trialing a number of different combinations across the country today. In fact, Damian is there this week, looking at the results of some of that and doing that in combination with the Coke Company in terms of what's the right marketing to really bring some excitement into the sparkling category.

So that's really what the future is really focused on, getting that right combination of pack price architecture with the right marketing to really unlock that potential. It's too early to say how quickly that will come. Is it '26? Is it '27? But at the end of the day, it's such a long-term opportunity.

We have to look at it as something we're in for the long term and just do the right things for the long term. It isn't material to our bottom line, as you know, from a business. So it's not impacting our results today. It's not a very profitable market for us today, but it's also not a drain on profit. So we can afford to make sure we get it right for that long term to unlock that opportunity.

Yes. And then briefly, zooming back out from APS, Energy has been a very nice contributor to CCEP's top line growth, really driven by the Monster portfolio. I was just meeting with them downstairs. Clearly, a lot of respect and excitement for what you guys are doing and what's happening with Monster in your markets.

So how are you thinking about sort of targets or how fast energy could grow in your markets over the next few years? And sort of how is that split between Europe and APS?

Yes. I mean, Monster has had a fantastic year for us. We've seen a real broadening of the category from all aspects, some amazing innovation and a lot of the growth that we've seen this year has come from innovation, but not all of it. We've also seen a lot of growth from the core. So a very healthy balance of that growth.

We've seen great growth in availability and distribution. We've seen growth in terms of the consumption occasions during the day and also growth in terms of the consumers. It's becoming much more balanced in terms of age profile, male, female and those drinking occasions.

We think there's a lot more opportunity to come. When you look at a number of the metrics versus the U.S., we see lots of opportunity to continue growing that availability and that distribution. We're seeing a big growth in our ability to place Monster equipment now.

As the category gets bigger and the Monster portfolio gets bigger, there's many more situations now where you can justify with a retailer having a dedicated Monster piece of equipment in the store. So we see no reason why that won't continue. And we're planning for another year of double digit next year, and it's a very significant contributor now to our growth.

So very excited about the energy plans in our developed markets. So that's Europe and Australia. And then it's very early days, but we've just launched Predator in the Philippines.

And again, I was very encouraged to see the performance of Predator in other markets around the world when we attended the Monster event there yesterday. And that could be a huge unlocker of potential for us in the Philippines and then maybe Indonesia in the months and years to come. And so a big contributor to our growth and a core part of our plans going forward.

Great. And then looking for your overall algorithm, back in Manila, you reiterated the midterm algorithm, the 4% and 7% top line OI, all organic. 2024, you did about 3.5% organic this year, consensus is around 3%, 3.1%. We're all aware of the macro headwinds. So can you talk briefly about the sort of the building blocks to kind of get back to and sustainably deliver on that 4%?

Yes. So yes, as we talked about in Manila, when you look at the components and all of the individual elements of the business, it actually adds up to a very healthy 4% or more. So whether that's like colas and the growth we see in that category, the ability to grow more Zero Sugar within flavors, lots of headroom there.

We've talked already a lot about energy. We think a lot of opportunity in spills, a lot of opportunity in ARTD as well that we haven't really talked about today.

And then you look at some of our markets, 2% to 3% is what we should certainly be doing year in, year out within a European developed market context. Bit more in Australia and New Zealand, more like 4% to 5%. And then our emerging markets like the Philippines, the Pacific Islands, Papua New Guinea should be growing high single digit.

So when we look at all of that together, that gives us a lot of confidence that on a consistent basis over the midterm, 4% is very possible. There are always going to be good years and bad years, and we've talked already about the headwinds.

Also where we have a lot of confidence is our ability to turn that 4% into a 7% at the operating profit line, helped with some of that volume growth as we're a very fixed cost business, as you can imagine, but also our ability through R&MGM to take a bit more price than cost perhaps, and then also fueled by our transformation and productivity agenda, lots of confidence in our ability to deliver that 7%.

Maybe you could give us a little more sort of granularity on that productivity and transformation. I believe it's EUR 350 million to EUR 400 million of savings by fiscal 2028. What are sort of the key buckets there? And then I know the ERP backbone integrating from, what, 4 systems to 1 is a big enabler there. So what's sort of the timing and milestones and frankly, the risk points that's been a source of risk throughout CPG over the past decade?

Yes. So productivity and transformation to start with. So this is our third program since CCEP was created. This is EUR 350 million, as you say, between '24 and '28. So we're a couple of years into that, going very well. We really plan to be able to deliver roughly EUR 100 million a year from that.

The big elements, I would say, are the supply chain and the network itself, still opportunities to better consolidate in Europe and in markets like the Philippines, in manufacturing and in the logistics area, opportunity to invest in new equipment that runs more efficiently with less people, better output, so a lower cost per case.

So really, a lot of that enabled as well by the technology and what technology can now do in terms of better forecasting, demand planning and resulting in better asset utilization.

The second big area is shared services. So we've been on a long journey on shared services. It really started with finance, which 90% of the activity in shared services was finance related a couple of years ago. We're already now at more like a 70-30 split. We do commercial operations, people services, some logistics and procurement activity out of our shared service environment.

And we see that as a real competitive advantage now going forward. One of the other benefits of being in the Philippines is there's an amazing access to talent out there in Manila in this environment. And we just opened a second shared service center in the last 6 months out in Manila.

And then the third thing is really how we can drive efficiency through tech across the business, also through shared services. So maybe you can look at situations where you can centralize activity, you can look at situations where you can do the same activity with less people more efficiently.

So all of those really combine to generate the majority of our productivity and transformation agenda. And then you're right, I mean, it's a good linkage because our investment in ERP and S/4HANA will also help that journey because we're moving from 5 ERPs actually is with Amatil as well from our acquisition history, and we're taking this as an opportunity to move to one ERP with one standard process.

We've got an extensive business case with really tangible benefits identified that we can leverage through that journey. But what I think is most exciting is when we get all that data in one place digitally from an analytics and an insights perspective, we're going to be able to drive a massive value in terms of understanding the business better and really using that to leverage better commercial and operational performance.

We're a long way along the journey in terms of the design complete. The build is done. We're doing now the local configuration for Germany, which will be our first market, which will go live towards the end of '26. And then we'll quickly follow throughout Europe and then down to Australia.

We're taking a very safe approach, I would describe it from a risk perspective. We have all got scars from previous SAP implementation. So there's extremely strong governance. And it's so important for us.

The critical thing is to do it the right way. And if we need to take a little bit longer to make sure it's right, we will certainly do that. But it will be a big unlocker of value, but we're looking 3 to 4 years before it's fully rolled out throughout all of CCEP.

Great. So having the CFO here, have to ask you about cash flow and capital allocation. This year, you're talking at least EUR 1.7 billion, which free cash flow slightly above your -- about EUR 1.7 billion despite top line being a little softer. I guess where are you seeing the upside on cash generation?

And then your leverage is basically at or even slightly below your target, even though you just finished your buyback program or finishing up your buyback program this year, EUR 1 billion a few months ahead of schedule. So maybe talk about the capital allocation priorities from here. It doesn't seem like there's anything big in terms of M&A on the horizon. So can we expect to see a more regular buyback year after year?

Yes. So cash is super important in CCEP. I mean we spent a lot of time really driving the understanding of cash throughout all aspects of our business, and we're very confident we can continue to convert that cash -- sorry, convert that profit very healthily into free cash flow. So no change there and lots of potential going forward.

And that really then feeds into that capital allocation framework. So no change. I mean we have -- we generate a lot of cash in our business. The first call on that is really to invest back in the future growth, and I've talked a lot about examples of that today.

We're committed to maintaining that leverage range between 2.5 to 3 and that investment-grade rating. And then absent any M&A, which I'll come back to, and continue with our dividend, which, of course, will grow given our policy, we do have extra cash then that we are committed to returning to shareholders over the long run.

The share buyback program in '25 has worked very effectively. So we'll continue to look at those types of mechanics going forward and returning that cash to shareholders for '26 in the future. And that allocation framework, there's no plan to change that.

Great. So to wrap up, it certainly seems like your relationship or CCEP's relationship with the Coca-Cola Company is really the strongest I've seen it in over a decade. And I think the same could be said for a lot of the publicly traded bottlers. So what's CCEP doing to sort of maintain this alignment, stay in a good place, got to work on the marriage even when things are good, and just to continue to make sure everyone is rowing in the same direction?

Yes. I mean I've been nearly coming to my 30th year now in the system. And certainly, I would say the relationship is the strongest that I've seen. I think one thing that helps is good performance. So if we deliver and the system delivers, then obviously, that makes that relationship a little bit easier.

I think a lot of trust in each other's capabilities and making sure everyone plays their part within the relationship. A lot of alignment. We look at everything together from long-range planning, midterm through to kind of tactical day-to-day operation. So a lot of time invested in the relationship from that perspective.

And then I think from a finance side, I think the economic model that we have and the incidence pricing model as well has been a big unlocker of that value in that relationship because it really incentivizes everybody to grow the system and grow the opportunity together. But no, it's in a great place, the relationship.

Great. Well, with that, I'm going to keep you guys on schedule. I want to thank you and CCEP for attending this year, continuing the streak here at the Morgan Stanley conference. So thank you.

Thank you. Great to see you, Eric. Thank you.

Thank you, Ed.

Hello, and thank you for standing by, and welcome to today's Coca-Cola Europacific Partners Q3 Trading Update 2025 Conference Call. [Operator Instructions] I must advise you that this conference call is being recorded today.

I would now like to hand the conference over to Vice President of Investor Relations and Corporate Strategy, Sarah Willett. Please go ahead, Sarah.

Hello. Thank you all for joining us today. I'm here with Damian Gammell, our CEO; and our CFO, Ed Walker. Before we begin with our opening remarks on our third quarter trading update, a reminder of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in today's release as well as the detailed cautionary statements found in reports filed with the U.K., U.S., Dutch and Spanish authorities.

A copy of this information is available on our website at www.cocacolaep.com. Prepared remarks to be made by Damian, we will then turn the call over to your questions. Unless otherwise stated, metrics presented today will be on a comparable and FX-neutral basis throughout. Year-to-date numbers will also be presented on an adjusted comparable basis, thus reflecting the results of CCEP and our Australia Pacific and Southeast Asia business unit, APS as if the Coca-Cola Philippines transaction had occurred at the beginning of last year, rather than in February when the acquisition completed. Following the call, a full transcript will be made available as soon as possible on our website.

I will now turn the call over to our CEO, Damian.

Thank you, Sarah, and many thanks to everybody for joining us today. Before I look at Q3 in more detail, I just wanted to take a moment to stand back and reflect on the performance year-to-date. It's been another solid year for CCEP. We are reaffirming our full year guidance, reflecting the strength and resilience of our business. .

So firstly, I'd just like to do a huge call out to the 41,000 colleagues at CCEP, who make this business great every single day. And as always, we continue to be supported by our strongly aligned relationships with our brand partners and our customers.

So we've delivered another quarter of volume growth in Europe despite softer consumer demand, and we continue to drive underlying growth in APS. The NARTD category is profitable and growing, not only up by value, up around 6% this year but also, and more importantly, by volume, not a dynamic we're seeing across other FMCG categories. and CCEP are winning, leading the way in creating value for our customers and growing share ahead of the market.

Our focus on revenue and margin growth management continues to support solid progression in revenue per unit case while it's balancing premiumization with affordability for our consumers. As you know, we've had some challenges this year, which we continue to navigate. These include some one-offs such as the portfolio changes in Australia and Spain with Suntory and Neste and also the challenge from softer consumer demand in a number of markets like Germany and Indonesia.

Absent the one-off headwinds, revenue to date would have been growing at a level more in line with our midterm revenue objective. So now just touching on market share. Our share overall has continued to grow. This reflects consistent share growth in the Philippines and the performance of Monster, which has grown share by just under 200 basis points this year. We have, however, seen pockets of pressure in the home channel in parts of Europe over the past couple of quarters.

Our focus remains on driving profitable growth with our customers while ensuring that we continue to prioritize consumer value for money. We've continued to see good progress in away-from-home, which is not well represented in the Nielsen share data. In GB, for instance, which is having a standout year, we have had great success in retaining key accounts and winning new business in off and on-premise across QSR, sandwich and coffee shops, bars, restaurants and sporting venues, all of which has contributed to growing away from home in terms of share and volumes, which have grown in Europe in every quarter this year.

Our efficiency and productivity programs remain firmly on track, delivering slightly earlier than planned. So together with our top line performance, we are driving strong and profitable cash generation, supporting record investment in future growth, a growing dividend and ongoing share buybacks. Our great brands, great execution and great people continue to drive the delivery of our clear and sustainable long-term strategy. So there's much to feel good about today.

Turning now to Q3. It's been another solid period with volumes and revenue growing ahead of half 1 with volumes up 0.4% and revenue up 3.2%. This has been supported by strong brand performances across the portfolio, driven by great activation, execution and some good innovation. Coke Zero grew 6.3% in the period, supported by Star Wars collaboration and the kickoff of the new exciting relationship with the English Premier League.

We also saw further improvement in Diet Coke, broadly flat with growth in GB reflecting the continued success of the This is My Taste campaign fronted by actor Jamie Dornan. Overall, Coke trademark volumes were flat following lower sales of Coke original taste. This reflects the Philippines flooding impact, the increase in the rate of French sugar tax and some consumer softness, particularly in Germany.

In flavours, Fanta has seen new icons of horror campaign with characters, including adorning bottles and cans in the run-up to Halloween last week. Elsewhere in flavours, Sprite performed well at 4.2%, supported by new QSR listing in France and in GB with new limited edition Green Apple X.

Energy has continued its excellent performance driven by Monster. We delivered volume growth of 24% during the quarter and 18% for the year-to-date. Recent innovation, in particular, Lando Norris Ultra, the strongest ever energy launch in Europe together with the enduring strength of our green and white Ultra Zero, have contributed to this performance, also supported by our ongoing rollout, which is driving increased distribution.

In ready-to-drink tea, although the transition in Iberia from Neste represents a volume headwind this year, great execution from our Spanish colleagues have supported much ahead of plan which you see strengthening its leadership of the category.

The sports category also continues to grow, driven by also recently introduced BODYARMOR to our customers in the whole channel with listings and convenience coming from Q4. And finally, we continue to grow our share of the ARTD category, the only alcohol segment currently in growth, up around 8% in value terms this year. Jack Daniel's and Coke is the #1 ARTD-SKU in GB and Spain with Bacardi and Coke and Absolut and Sprite continuing to drive overall share gains.

Now quickly, just turning to our performance across the markets. We had a strong start to the quarter in July as we highlighted in our half 1 results supported by more favorable weather in Europe. We continue to see the impact of July flooding in Philippines in August. And across the group, August was more mixed from a consumer perspective with that continuing into September.

This aside, in Europe, we delivered another solid quarter of volume growth, with volumes up 0.9%, supported by continued growth in Away-from-Home and a great performance, as I mentioned, in GB. Our revenue was up 3.2%, supported by growth in revenue per case of 2.7%, slightly lower than the previous quarter, reflecting an earlier price increase in GB.

Although the NARTD category continues to grow strongly, it remains as competitive as ever. Notably, in Germany, where we've seen a softening in demand as affordability and value for money become increasingly relevant driver for more consumers. It remains as important as ever that we have the right packs at the right price points across all of our channels.

We continue to prioritize profitable volume growth, maintaining the optimal balance of promotions across portfolio, but with more focus on mechanics and messaging to visibly emphasize value to our consumers.

In GB, for example, 2 free cans with an A can multipack in Spain, a 4 for 3 on 1.25-liter bottles or in Germany, a buy 12, get 2 free on a one-liter crate are all examples of how we continue to offer the right value proposition for our consumers.

Our results in EPS for Q3 reflect the impact of some of those one-off events, namely flooding in the Philippines, and as we talked about earlier, the exit of our Suntory alcohol distribution in Australia with distribution in New Zealand due to finish in December. APS volumes for the quarter were down 0.6%, with revenue broadly flat. Excluding the Santori impact, performance in Australia was strong with volumes and revenue in Australia Pacific overall growing mid-single digits and high single digits, respectively. This is supported by continued strong growth in our Papua New Guinea business.

During Q3, we agreed a new multiyear agreement with Bacardi Martini, which from this week sees us start the distribution of the Bacardi portfolio of premium spirits and ready-to-drink brands in Australia, including, of course, Bacardi and Coca-Cola, the latest addition to our ARTD portfolio down under.

Q3 volumes in the Philippines were held back by the floods which also disrupted distribution in August, with September returning to growth. In Indonesia, we've seen the rate of decline ease versus Q2, but volumes continue to reflect a weaker consumer and macroeconomic backdrop.

Our transformation of the route to market continues to progress to plan and is expected to complete by the end of this year. This will strengthen our presence and execution in the market, and we will be fit for the future.

Touching now on our investments across CCEP to support our long-term growth. During Q3, we opened our largest canning line to date at our site in Queensland, a EUR 65 million investment to support the ever-growing demand for Monster, producing 120,000 cans per hour. We also began to build our third aseptic line at our plant in Dunkirk to cater for the growing demand for brands like Powerade and Fuze Tea, while also breaking ground in the Philippines on one of our largest infrastructure investments to date, the new plant in Tarlac just outside Manila.

And our investment in technology saw the introduction in New Zealand of the latest innovation in cold drink equipment, Coke & Go, a new generation of smart coolers, which uses AI and image recognition to offer a faster, more convenient experience to our consumers.

Delivering $2.3 billion in revenue last year, we're continuing to invest in our B2B portal, MyCCEP, making it even easier for our 260,000 registered customers to do business with us. The portal is now available as a convenient app for customers in Germany with other markets to follow over the coming months. Revenue through our portal continues to grow ahead of our overall top line.

And finally, our SAP rollout of S/4HANA, a key foundation for future top line and productivity gains is progressing as expected with the first deployment in Germany running smoothly. I would now like to return to what I said at the beginning. We are reaffirming our full year guidance, which is in line with existing market expectations.

We are very pleased to be declaring a second half dividend of EUR 1.25 per share, which together with our first half dividend of EUR 0.79 maintains an annualized payout ratio of approximately 50%. And the current EUR 1 billion share buyback program will conclude in December. We will provide a further update alongside our full year 2025 results in February.

Looking ahead, I'm proud of the strength and resilience of CCEP and have continued confidence in our ability to deliver. The fundamentals and opportunities for our business are strong, and we operate in a resilient and innovative consumer categories, which are healthy and are growing. We continue to grow our top line, supported by share gains, and we see sequential periods of volume growth in Europe and underlying growth in APS, supported by unmatched capabilities in revenue and margin growth management.

While the global macroeconomic environment remains volatile, and we're likely to see challenging consumer conditions persist, we will start to cycle some of this year's headwinds, particularly during the second half as we annualize the exit in Australia. We're investing more than ever in our key capabilities, accelerating productivity through technology and digital, supported by the strength of our cash generation, which also underpins our ability to sustainably grow returns to our shareholders.

We, therefore, remain very confident that we have the right strategy done sustainably to deliver on our midterm growth objectives. Again, thank you for your time today. And Ed and I would now be very happy to take your questions, and I'll hand the call back over to you, operator. Thank you.

[Operator Instructions] Our first question comes from the line of Matt Ford from BNP.

My question is on the consumer affordability point that you mentioned, Damian. I think you mentioned that sequentially kind of throughout the quarter, you were noticing in a few markets, things becoming a little bit more challenging. I'd just like to get your thoughts on I suppose, how things have developed in October across Europe and across your markets?

And kind of looking forward into the rest of the quarter and into 2026, how would you say this increased consumer pressure is likely to affect your strategy in terms of your prioritization of volumes, perhaps at the expense of price mix as you look to promote a bit more? Yes, just to get your sense on the outlook for top line growth in Europe going into 26%, given the environment.

Yes. Thanks, Matt. So I would say it's been pretty consistent now for a number of quarters that particularly in markets in Europe that consumers are responding positively to a lot of our value pricing and communication. I think what's interesting is, in parallel, we have seen away-from-home return to growth. So I think that's a good sign across our markets.

As I look -- as we look into next year, I think we're assuming that, that consumer sentiment will remain pretty consistent. I don't see it getting any worse. I don't see our pricing strategy changing. We'll continue to take price. I think that's an important part of that balanced growth. We will see volume growth next year as well as we look at our brand and pack price strategy.

But I think overall, I think that value price point management will remain important into 2026. But we'll give a bit more color, obviously, at full year results time on our guidance for next year. But I would expect us to keep our balanced growth outlook for Europe, which was typically price, volume and maybe even a bit more mix next year as we see away-from-home continuing to strengthen.

Our next question comes from the line of Edward Mundy from Jefferies.

So just to build on that same theme, I think you're highlighting it's not necessarily a significantly weaker consumer environment, but just to broaden it, it's not the first time we've seen a soft environment with Europe. I'd love to sort of get your perspective, Damian, on how your business today is set up to better able to navigate a potentially softer environment given some of your digital tools, your RGM investments, execution and also your category mix with Energy bigger?

Yes. Thanks, Ed. So I think as you've seen, we have been able to grow volume and revenue in this current environment. And we're obviously confident that will continue going into next year. What gives us that confidence are a number of the capabilities you called out. I think, one, we have invested smartly, I believe, in good capabilities around revenue and margin growth management. .

That's allowing us to hit the price points that resonate with consumers, but continue to deliver value for our shareholders and for our customers. So that pack pricing architecture, I think, remains a core strength of CCEP. As we've talked about before, if you visit any of our customers, you'll see a wide range of SKUs covering a lot of different price points. Some offer value. We still have a lot of SKUs that offer premiumization, whether that's mini cans or glass.

So we still have a lot of consumers out there who are quite happy to pay a little bit more for convenience or for packaging premium. So that gives us confidence in that revenue delivery. Our portfolio is evolving. So as we look at, obviously, ARTD is a relatively new category for us, but that comes on top of our great soft drinks business. It also comes on top of a very dynamic energy portfolio.

And then we're also looking to the future with brands like BodyArmor being launched in Spain, and we'll continue to look at can we drive a bigger sports portfolio through POWERADE really on the back of what we've learned from that great business in Australia. So definitely price packaging architecture, the data and analytics around how consumers are responding to that will be key.

A broader portfolio. So a lot of those categories I talked about, our share position is a lot lower than it is, for example, in our cola franchise, so that's incremental growth. And then fundamentally, we see the category growing. So NARTD, as I called out, is a growth category. So we're very well positioned in a category that's growing anyway. So participating in that and taking more share I think, is definitely part of our plan for 2026.

And we'll continue to work with the Coca-Cola Company and Monster on more innovation. And I think we've seen that being a key driver both recruiting new consumers but also growing the categories. So across that balance, I feel pretty good about our midterm revenue guidance. And then on top of that, I talked a little bit about my prepared remarks, the investment. So in parallel, we are investing a lot into this business, both in terms of capital and technology.

We talked about it on a previous call. This will be a record year for cooler placements. and that type of investment will deliver growth multiyear going forward. And we see the same investment levels as we look into 2026. So a combination of all that, Ed, certainly gives me confidence.

I'd also say that we continue to see positive signs coming out of Diet Coke in GB. We've talked about that before together. That has been a challenge on our numbers, particularly out of GB. So it's great to see that brand responding to the investment we've made and the focus we've given, and then also, clearly, in APS, we've had a tough quarter in the Philippines, but that business continues to get stronger.

And Indonesia, while it's not where I'd like it to be, clearly, we are starting to see some early signs of that business at least getting to a more normalized performance level, which gives us a bit more confidence as we look into '26. So a long answer to your question, but it covers a lot, I think. Thanks, Ed.

Our next question comes from the line of Andrea Pistacchi from Bank of America. .

I just wanted to follow up actually on Indonesia, which you just touched on. As you said, it improved in the quarter, but still declining high single digit. So could you talk a bit more about, I mean, the drivers here of the improvement, I mean you're implementing the turnaround plan and the distribution changes should be complete now by year-end. Is the improvement coming on the sparkling parts, mainly and tea still difficult and you're confident of being able to finally bring Indonesia back into growth next year?

Thanks. I mean, it's a business we're extremely passionate about at CCEP, and it's a fantastic business, but it's clearly gone through number of challenges. So in terms of what we're in control of, very happy with our route to market transition. That's just finalizing now. So that does set us up with a much better execution route to market, but also a more efficient cost base going into the future. So that was a change that we had to make, and now it's complete, and that's gone really well.

From a growth perspective, we are seeing our sparkling portfolio doing a lot better. It's all relative, but it is doing better. So to your point, our drag in our performance is really on the tea portfolio. Within that, we are seeing progress on our flavor tea. So that's performing well. It's really on our kind of more standard black tea proposition, regular tea that we haven't quite found the price point or the product that we need to. So that's work in progress.

So I'd expect as we look into 2026, certainly a better performance in Sparkling, led by Brand Coke and Fanta in particular. With Ramadan coming early in the year. So that will be a great start to the year for us in Indonesia. We know that's a period that excites our consumers, but also our customers. And I'm really pleased that's coming early because I think will really allow that new to flourish in what is a key selling period.

And we're continuing to work with the Coke Company on a more Indonesian centric consumer marketing campaign, and I think that's definitely paying off. So more work to do on tea, absolutely early days on sparkling. But some of those macroeconomic headwinds are starting to, I would say, moderate a bit, and we're certainly seeing that in our performance as we come into the end of the year.

But we will be talking about Indonesia, and its opportunity for quite a while yet to come. So yes, happy that we're making the changes. But clearly, until we get back into that mid-single-digit revenue growth, we still have a lot of work to do in Indonesia.

Yes. And maybe just to add, I mean, while it's obviously frustrating given the long-term opportunity and all the transformation we're doing. I mean, as you all know, it's not material to CCEP from a profit perspective, but we'll continue to do the right things for the long term to unlock that opportunity. .

Our next question comes from the line of Eric Serotta from Morgan Stanley.

Hoping you could expand a little bit on the Europe away from home trends? I know you pointed to share gains. But more broadly, we've been seeing pretty strong away from home trends or positive away from home trends in Europe this year. At the same time, kind of building consumer pressures and weaker -- weakening at-home trends.

So I guess how do you square the two? What's your read into the consumer there? Is there a consumer bifurcation between high end and low end or middle to high end and low end? And -- or do you largely attribute this to your execution and share gains?

Thanks, Eric. I mean, I think we have to talk about the comps as well. So not that that's going to help me. But I mean, clearly, we have had previously a number of quarters where we didn't see growth in away from home. So mathematically, that helps.

Beyond that though, we are seeing a number of factors. One, the category, NARTD, generally is in very good health in away from home. I mean people are drinking more NARTD beverages when they're out in the bars. We've seen good customer wins supporting air growth in the channel. We've also seen customers responding, I think, even more to some of those affordability challenges. So you're seeing a lot more value deals, menu deals, early bird deals across Europe. And clearly, we participate in that with our customers. So that's helping.

And obviously, we did benefit from some good weather, particularly in Northern Europe, and that's always a key driver for our away from home business. So our cooler placements, which I talked to, our focus on incidents is also helping. I mean, that's a longer-term impact on our growth. But I think overall, the combination of cycling a number of quarters where we weren't growing and where away from home was under pressure. Very good customer strategies around value and, I would say, instance driving, which we participate in. And then clearly, our execution capability on the back of our coolers is supporting growth. So it's great to see that coming back.

I mean it's a big part of our business. It's a big part of our profit. It remains a priority for us to do better in terms of execution. But obviously, as it grows, we continue to see that as a mixed benefit in our business. It's not one story across Europe, I would say, particularly GB is a stand out. On the other side of the equation, Germany, we haven't seen the same strength in away from home there. So I would say it's not a one size fits all across Europe. We've seen really strong performances in GB but a much tougher consumer environment in Germany, and that's something that we continue to focus on.

Our next question comes from the line of Lauren Lieberman from Barclays.

Great. I wanted to talk a little bit about trademark Coke. So really encouraging signs on Diet Coke moving to flat and with growth in GB called out Australia being better too. So I wanted to talk, I guess, about Diet Coke trend line, other key markets to kind of -- and what do you -- do you think that business can get back into mid-single-digit growth? Are there other markets to kind of add to the pile that can be material.

Zero Sugar also accelerated this year. As I look back at all the releases this morning and trend line last year was like kind of low single digits, and this year, you're more solidly in mid-singles. So maybe talk a little bit about what supported that acceleration specific around execution or anything that you've been doing differently to support the acceleration in Zero Sugar.

Yes. So maybe I'll start with your last point around Zero Sugar. So really happy with the growth we've seen this year. I think that's on the back of a number of initiatives. I think one, obviously, the product is fantastic. It tastes great. So continuing to remind our consumers that compared to a number of years ago, the taste penalty from moving out of classic into zero is really gone. So I think taste is still a key driver of our category and something we never take for granted.

I think on the back of that, a number of initiatives I talked to earlier, particularly around our promo strategy, our pack pricing, flavor innovation has already benefited Zero Sugar. Clearly, it's our lead brand as we look at our cooler rollout. So I still think we have more to do. I think we could grow faster on Coke Zero Sugar, to be honest. So while we're having a great year, I'm still somewhat discontent that we could do more. It's the fastest-growing segment within soft drinks, and it's an area that I think we can and should take more share in.

So while we're happy. I think there is honestly a bit more work to do on Zero Sugar as we move into 2026. As I look to Diet Coke, again, it's mainly a GB story at the moment and Australia where they're our 2 biggest markets. I think the dedicated campaigns are definitely working. I think we clearly see that as a brand that if you support it independently, it will respond, and we've got a very loyal user base. It's a little bit early to think about other markets yet.

But clearly, what is on our mind is if that dual strategy within the light-collar segment really delivers it's an obvious question to think about what's it mean for Coke Light in Belgium or in France or in other markets. That's probably a conversation that we'll come back to in the middle of next year. Our primary focus now is to get Diet Coke back into growth in GB and then I think we would kind of guide to what that growth would look like going forward. But clearly, the first milestone is to get it into growth.

When you look at Coke trademark overall, I think a couple of challenges this year have been one in Germany where we've seen promotional pricing move up, and that's clearly impacted Coke Classic. We've seen the tax in France, which is quite a significant price hike. And then clearly, Coke Classic is by far and away, our biggest brand in the Philippines. So if the Philippines has got any challenges, you really see it reflected in Coke original taste.

So some of those are one-offs. Clearly, some of the pricing moves we will look at as we move into '26. But overall, pleased with Diet Coke, early days really pleased with Zero Sugar, but I'm a little bit discontented as I think we should be growing a little bit faster. And as we talked about previously, I'm very excited with the Coke Company that we're bringing back flavor innovation on Coke original taste next year. And I think that's going to be really exciting for is still our biggest brand.

Our next question comes from the line of Nadine Sarwat from Bernstein.

So in the release and so far on the call, the weaker consumer sentiment in Europe is a key topic of discussion. Can you share a little bit of how that is manifesting itself by different demographics? So whether that's age or income to give us a flavor of where some of those pressure points are greatest? And then related to that, which specific parts might have gotten better or worse compared to last quarter.

Yes. Thanks, Nadine. So as I mentioned earlier, I mean, when you look at the size of the category and you look at our pricing strategy across it, I would say there's many parts of our business continue to do really well, whether that's our single serve, our can business is performing really well, and away from homes coming back where we've really seen more of the pressure has been on the more value-orientated consumer, so lower income.

And typically, the package where that's kind of come under the most pressures are large PET. So in Europe, that's really around your 1.5 liter to 2 liter. And that's where we definitely see the consumer one, responding more to value but two, also not so much decreasing frequency, but the amount of product they buy, and that's really what we've been trying to address with some of our promo strategy. So it's not a story across all packs.

A lot of our packaging are growing ahead. It's really on that large PET, and it's really probably, yes, as I said, lower down, I think, at the consumer more in the lower socioeconomic areas that we see more of the pressure.

Our next question comes from the line of Charlie Higgs from Rothschild & Co Redburn.

I've got a question on energy drinks, please, which despite all the talk of weak consumer, actually accelerated 24% volume growth in the quarter, which is pretty remarkable. Are you able to give any color on the contribution of innovation to that growth versus core or a bit more color on what were the key countries that were driving that growth and perhaps within it, how creditor and the Philippines has been performing since you changed the brand proposition over there?

Yes. So Charlie, as you called out, a standout category and obviously, Monster is standout brand in our performance. Maybe touching on the Philippines. It's still very early days was there. So we're excited about the opportunity of the energy category. It's quite relevant already in the Philippines, we're new into it. So certainly more to come on our predator proposition.

We've made some changes around pricing there recently. So as I said, early days. Back in Europe and also in Australia and New Zealand, the growth in energy has been really strong. I think it's on the back of innovation and on our core. So I think we look at both, obviously, in a lot of detail. So innovation is key to the category, whether it's Lampo, whether it's new flavor innovation, but we do see a balanced growth between innovation and core, and we think that's important.

So Monster Green, Monster Ultra continue to perform really strongly, and you overlay that with innovation, and I think that's where you get to that mid-teen growth in the midterm that we've talked to. Yes. So I think it's also something that we're excited about going into next year.

I think I mentioned in our half year call, we had a good session with the Monster Group in Paris recently where we looked at 2 years out innovation. So we see a very strong pipeline. That gives us confidence. And then on the back of that, we see stronger growth in away from home, where we continue to have a big opportunity to drive distribution.

If you look at our months of distribution away-from-home, there's a massive opportunity for us to do better there. Our cooler placements will help that, and that is supporting the growth. But there's a long runway ahead of us, particularly in away-from-home distribution on the Monster and on the energy category. Yes. So very exciting, and we see that continuing into '26, Charlie.

Our next question comes from the line of Sanjeet Aujla from UBS.

Just coming back to top line. So it feels like this year, you're going to be landing closer to 3% organic sales growth. Next year, you've got another half year of the exit in Australia, a full year in New Zealand. Is it fair to see those technical headwinds make it difficult for you to hit 4% next year even if Europe volumes can grow?

Thanks, Sanjeet. Well, we're not giving guidance today for next year yet. So -- but clearly, yes, there are some elements that will continue into next year. There are also some elements that will move out, so like tea in Spain. So we'll give a bit more color on '26 guidance when we get to our full year results. But clearly, we're still very comfortable with the 4% midterm guidance.

And I think that reflects a midterm view of some of those technical elements go away. But also as we add in a lot more innovation and we continue to see the category to grow. So I'll give a bit more color on exactly what it means in '26 as we factor in those technical elements. As I made the point on the call, if you kind of take those out, clearly, we're pretty much bang in line with that 4% guidance. So we still feel very confident about that as a midterm.

Obviously, we'll be as happy as you guys where when we cycle out of some of these one-offs because I certainly don't like referencing them so often, but they are a real factor. But when you take them out, you do see us pretty much around that 4% level. And then there's a couple of elements that are very much in our control.

One is, obviously, the Philippines business has been impacted in the quarter. We're seeing that returning to normal levels of growth. And we talked a little bit about Indonesia, which from a profit perspective, as Ed said, isn't that material. But clearly, on a growth level, it does have an impact. And clearly, that's something we see getting better.

So yes, probably a few puts and takes as we move into '26 but net-net, pretty comfortable with that 4% as a midterm objective for the company.

Got it. And how much of the loss being distribution in Australia, are you able to offset with Bacardi, which is now coming online in Q4?

Yes. It's quite small. I mean, we're really building a new business there. and we're giving up a business that we spent, I suppose, 15, 16 years building. So yes, it's going to take a number of years for us to get back to a similar level of revenue. That's for sure. But ultimately, we are building out a new portfolio, and we feel good about it. But yes, it's definitely not going to cover it, Sanjeet, in the near term. That's for sure.

My Australian colleagues might prove me wrong, but let's see. But I think the beam business is a very strong portfolio that we've moved out of, but we're replacing it with great brands, but it will take time. .

Our last question for today comes from the line of Robert Ottenstein from Evercore ISI.

Great. Not asking for specific guidance on 2026, but would love to get a sense of the kind of things that you're focused on, on '26, I think you probably are finishing up or have finished your discussions with the Coca-Cola Company. So maybe if you could give us an idea of 2 or 3 initiatives that you have aligned on for '26 kind of key things, whether it's innovation, or GM or IT-related initiatives? And maybe touch on the World Cup and remind us traditionally, historically, how much of a factor that's been in a given year?

Thanks, Robert. Well, you're quite correct. I'm not going to give guidance for '26. And I'll give a little bit of color around your question, but obviously, some of the elements we're working on are, we want to keep close to ourselves. But ultimately, you mentioned one, clearly, the World Cup is a great event for our brands. And we will -- we've already gone through a lot of planning with the Coke Company on how we make it the best World Cup activation ever. A lot of our markets are participating. So that will definitely be a big part of our summer campaign.

A lot of what we've been doing this year will continue into 2026. So that may sound a little bit boring. But clearly, on the energy category, we have a pipeline of innovation that will continue. I talked about driving our distribution there. So that will continue into '26. We'll benefit from our cooler placements in '25 and '26 going forward, so that will help. And then on our priority brands, particularly around Diet Coke, we'll continue to support that in GB and Australia. I mentioned earlier that's something we reflect on what it mean for other markets probably as we move through '26.

You'll see more flavor innovation on our sparkling category. You'll see a continued focus on Coke original taste flavor innovation. We've got Coke Zero zero going out in a lot of our markets at the moment, we'll benefit from that in '26. We've got more work to do on Fanta. So that's something we continue to focus on, not just on innovation, but on the core proposition.

Yes. So pretty full calendar, Robert, and I'd say, quite balanced growth across our brands and our territories. Yes. And obviously, the investment and the changes we've made in '25 will benefit '26. And we're also looking at pricing as well. So clearly, that will be part of our revenue story. Some of that's already gone in, in September this year. So we feel good about that, and the balance will come in January.

I might just pass it over to Ed to talk about a few other highlights.

Yes. I think, Robert, from a P&L side as well, we'll continue with a number of the themes we've progressed in '25. So be another big year of productivity and transformation for CCEP as we work towards that EUR 350 million to EUR 400 million target. And another big year of investment, whether it's another significant increase in coolers in the market, making the most of all of these capacity investments we've done in a number of our regions over the last couple of years. and continuing to invest a lot in capabilities, whether it's in AI and a lot of the tools we talked about earlier in the call. in the areas or we'll see the first big go-lives of our S/4HANA suite through many of the markets, starting with Germany. So a lot's happening as well from a P&L and a productivity transformation perspective next year.

Thank you. I would now like to hand the conference back over to Damian Gammell for his closing remarks. Damian, please go ahead.

Thank you, operator. And again, a big thank you to everybody for joining us today. As you've heard from myself and Ed, it's another solid year for CCEP and lots of opportunity as we look into 2026 and beyond. Really happy that we're reaffirming our full year guidance today. And clearly, the next milestone, and I look forward to speaking to you again, is with our full year results in February. And so with that, I'll close the call. And again, a big thank you for joining us. Thank you.

Thank you.

That concludes our conference for today. Thank you for participating. You may all disconnect.