PepsiCo, Inc.

Good morning and welcome to PepsiCo's 2024 Second Quarter Earnings Question and Answer Session. Your lines have been placed on listen only until it is your turn to ask a question. Today's call is being recorded and will be archived at www.pepsico.com. It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President, Investor Relations. Mr. Pamnani, you may begin.

Thank you, operator. Good morning, everyone. I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans and updated 2024 guidance. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, July 11, 2024, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our second quarter 2024 earnings release and second quarter 2024 Form 10-Q available on pepsico.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Jamie Caulfield. We ask that you please limit yourself to one question. And with that, I will turn it over to the operator for the first question.

Thank you. In order to ask a question or make a comment, please press star followed by 11 on your touchtone phone at any time. We will pause for a moment while we compile our Q&A roster. Our first question comes from Darren Moschitti with Morgan Stanley. Your line is open.

Hey good morning guys. So I just wanted to focus on the implied organic sales growth guidance in the back half year of mid single digits to get to the approximate 4% guidance. You've obviously had a great longer term track record Ramon under your tenure but in this softer US consumer environment we've seen low single digit growth in the last couple of quarters so What gives you confidence at the corporate level you can get back there? And specifically, I wanted to dial down into Frito-Lay North America, which is presumably a piece of that. Obviously, a pretty soft volume result in Q2. You had taken some initial actions. So, you know, help us understand the incremental actions from here. What gives you confidence you get a volume payback and a top line payback from that? and how sort of free LA North America fits into that, uh, in my top line recovery also.

That's great. All right. So I think it's, it's, it's an important area to focus the, um, you know, when we're saying at least four, we were talking more about a around five in our, in our minds. Now we're talking around four. So that, that's the, uh, that's the people we're making. There is an adjustment and it's, it's related to specifically, um, the consumer in the U S and we can talk a little bit more. Now, why do we feel good about our guidance? And it cannot be disconnected from our earnings performance because I think the work we've been doing on our productivity and our cost reduction gives us the optionality to reinvest back in half to in a way that we feel much more comfortable about the performance. So a couple of, I would say, elements that give us confidence. Now, one is Quaker. quaker you know you're all familiar with with the situation we're recovering the supply chain by q4 you know we'll be in almost 100 supply and obviously the business at that point will be growing materially because we're just refilling the shelves on the pipeline so that that that should be out of out of the picture and it will be a positive impact for us the second is mathematical but it's lapping and we think it you know obviously the labs are much better in second half and that has a a It gives us confidence that we can get back to a mid-single-digit type of growth in the second half. The third element is international. International is an area we've been investing for the last few years materially and is delivering for us. First half of the year, 7%. We'll continue that same level of growth in the second half of the year. Pluses and minuses around the world, but the portfolio is diverse enough, scaled enough, Profitable enough around multiple parts of the world that we believe that we can deliver and then now in the US There is clearly a consumer that is that is more challenged and it's a consumer that is telling us that in particular parts of the portfolio of our portfolio They want more value to stay with our brands that is not for all the consumers is some consumers that is not for all the portfolio is some parts of the portfolio and we have been working different tactics and to give the consumer what they want and we see that it's working and that's why we feel comfortable about you know given the oxygen that we have in the pnl they will be able to deploy in a very targeted way thinking long term about the category making sure that has it has good roi they will be able to turn around the uh especially what you were referring the food business to positive volume and with that a higher level of net revenue. So that's how we're thinking about the second half. Again, we have green shots with some of the activities we've been executing, and July 4th has been very strong for us, and we feel good about the business. Now, the North America beverage business is also to be highlighted. It's a business that we said over time we want to stay with deliver profitable growth, make sure we compete well in the category, but at the same time improve our margins. We think we're executing the playbook well. Actually, we've been accelerating the profitable growth delivery of the business, and it should continue in the second half. We're investing in advertising and marketing even more in the platforms that are growing, and that's what overall, you put it all together, we feel good about the second half.

uh of the year and the momentum that will start 25 with that thank you one moment for our next question our next question comes from bonnie herslog with goldman sachs your line is open all right thank you good morning everyone i actually had a question on pbna ramon i know you just touched on it a bit but i'd be you know curious to hear if if you're satisfied with some of the progress you might be making to reinvigorate the business and And maybe what green shoots you are seeing, you know, within PB&A. And then I guess I'm hoping for some color on the initiatives you highlighted in terms of the discipline. Commercial investments should be assumed. This will also mean a potential step up in promos for PB&A. And do you maybe see a need for some brand repositioning? Are there structural opportunities? You know, essentially what will be the drivers, you know, to reaccelerate growth at PB&A? Thanks.

Yeah, it's good. Bonnie, I'll give you a couple of data points that I think are relevant. Gatorade, for example, has been gaining share this year, year to date, meaningfully. It's accelerating. That's a core part of our portfolio and a very profitable part of our portfolio. So that's one data point. We've been investing in Gatorade, not so much on, as you were saying, promos and discounts, but more on innovation, execution and branding, and that's paying back. The same with Propel. So all that functional hydration space, I think it's a focus for us. It's always been a focus, but now I think that part of the portfolio is working well. I think some of the G2DSD challenges that we had last year are behind us. I don't think we're all the way to perfection there, but much better service levels in this early part of the summer. which obviously that's when the category peaks and where we have to be ready for perfection. So that part is clear. If you think about the other brand, we've been talking for some time, Mountain Dew. Mountain Dew is on growth now. It's back to growth. I think we made the strategic decision to have multiple flavors driving the brand and made Baja a structural part of the portfolio versus just an LTO that's driving consumers into the brand Incremental consumers and again better levels of execution So there's some examples all the zero part of the portfolio is booming right if you think about consumer trends Clearly we know where they're going. We know that internationally and we know that's going to eventually happen here in the US So zero not only on colas not only on soft drinks, but also on on on Gatorade on on teas on coffees we're seeing that consumers are going. And then the last part is our food service business is becoming stronger and we're being better at where the profitability is, which is on the fragmented restaurant, local restaurant and where consumers have a lot of interaction every day. And that part of the portfolio we've been investing, we're getting additional distribution, we know we're becoming a better a better execution company in that particular channel, and we're feeling good about that.

Thank you. One moment for our next question. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Great. Thanks so much. Roland, I wanted to go back to Frito, if I may, because you commented on, you know, some consumers and, you know, being more value to stay with our brands. But one thing we've been doing a lot in trying to parse through the data that's available to us, and it looks like it's the category, the salty snack category as a whole is really pressured. It's not just your brands. I know given your share, they're sort of one in the same, but it looks like there's a broader category issue. Again, some of the data we've looked at, it feels like the category is not proving terribly responsive to promotion. So I just was hoping you could comment on that, if that is or isn't consistent with what you're seeing and how what you're going to be doing will be different. Because again, what we've seen so far, it doesn't look like there's a lot of response and it feels like the category is proving more discretionary. So just love your thoughts on that. Thanks.

Yeah. I think we feel that the issue is an issue of value. It's not an issue of... anything else and and we have a lot of data obviously now how do you address that value gap versus what consumers want to do I think it's the is the you know it is where they know how will come and the sweet spot for us is not to promote but is to promote to who needs it in their products that need it versus a blanket approach to promotion So that's where we're investing a lot of time. I think we're much more capable from the insights and diagnostic point of view and also from our ability to execute more granularly all these interventions, be it digital, be it with particular channels or customers. To give you an example, we feel that the unsalted part of our portfolio, right, if you think about potato chips or tortilla chips, that needs some value reset and and value intervention for some consumers when we think about flavor potato chips or other parts of our portfolio no i mean consumers are staying in the category are staying in our brands and they're buying with with pretty high frequencies in the past there are other parts of the portfolio that are growing growing very fast especially the permissible part of what we call permissible portfolio positive choices this is a You think about brands like Sunchips, Popcorners, Smartfood, or the Simply range of the Eden Path. Those brands are growing, and there is not about value. There, I think, is more about, and the way we're going to approach it is more marketing, investment, awareness, execution, availability. So there's different tools that we'll be using to drive the category growth. To your point on is it the categories of PepsiCo brands, I think given our massive participation in the category through many multiple brands, I think it's our responsibility to manage this category for the long term, providing value to consumers in different ways, and continue to have the savory snacks category growing above food structurally as we have done in the past. Now, there is nothing... in terms of consumer long-term trends that tells us that that's not possible. I think it's the small adjustments in value and in execution and in investment in new innovation areas that will drive it. And we feel very strong about our ability to do that, not in the long term, but actually in the short term, in Q3 and Q4. And that's why our guidance reflects a little bit that inflection because we're already testing executing some of these levers, and we see the returns it has in volume and net revenue.

Thank you. One moment for our next question. Our next question comes from Brian Splane with B of A. Your line is open.

Hey, thanks, Operator. Good morning, Ramon. Good morning, Jamie. Just wanted to circle back on Frito, and I guess stepping back, you're able to sort of reset the margins and fund it with just drilling deeper into some of the reservoirs of productivity, other places in the organization. So I guess just if you can comment on two things related to that. One, given that you're tapping more productivity this year, how does that affect next year? Does that affect maybe not having as much productivity to flow through, or is that reservoir very deep? And then secondly, The second is, as we're thinking about Frito margins stepping back in the back half of the year, should we be thinking about that now as the new base to maybe grow off of gradually? Or is that a major step down and then you'd expect Frito to have another maybe step change up in the future?

Yeah. So Brian, let me tell you, I think we've talked about this in the past. We're managing total PepsiCo operating margin and As you've seen, we keep improving the margin. This quarter was almost 100 bps of operating margin improvement, and it's been consistent for the last few years. We feel good about our productivity pipeline. It's not tactical. It's super strategic, and it's multi-year, and it's based on automation. It's based on digitalization, simplification of the company, standardization, different models to the business. So there is a whole portfolio of productivity ideas that are multi-year in nature, and we don't think that we will slow down our productivity in the coming years. Now, as you think about our overall margin, international has continued to grow its margin. PB&A has been very vocal from our side that we want to have that business moving into and we're delivered on that. And we've always said that the big value of FREDO for us is not so much whether it's a 26 or 26 and a half or 27 and a half. That is very relevant, I would say. It's always tremendously accretive for us long term. And the biggest value creation for FREDO is to make sure that it grows at a four or 5% levels. And that is gonna be our, continues to be our strategic focus. How do we get FREDO to continue to grow above the category, make the category very healthy in terms of growth, keep bringing consumers, occasions, and new opportunities for channel expansion to Frito, and that will continue to be our focus. We'll keep investing until we get it right. We feel good about getting it right rather soon, and that's the way we'll keep managing the overall profitability of the company. and Frito, PB&A, and international in particular with different sub-strategies, and obviously that triggers down to every market around the world when you talk about international, but we have a very good playbook for every country and every line of business in every country, expectations on profitability and roadmaps to deliver that kind of growth.

Thank you. One moment for our next question. Our next question comes from Camilo Gargiola with Jefferies. Your line is open.

Hi, good morning, everybody. Do you believe that the prices at Frito are too high given the increases over recent years?

Listen, Camilo, I think I kind of touched on the point earlier, but some parts of the portfolio need value adjustments. Some parts of the portfolio don't. Some parts of the portfolio need to be, for particular consumers, we need some new entry price points and probably some new promotional kind of mechanics that don't expect for the consumer to invest so much cash in a purchase of salt. So there's adjustments that we have to make for certain consumers, some parts of the portfolio. I don't think the overall portfolio is you know, needs a reset. I think this is going to be about granularity. It's going to be about, you know, good execution of that granularity. And that's what I think we're well prepared to do throughout, you know, throughout the full value chain. So, yes, there is some, you know, value to be given back to consumers after three or four years of a lot of inflation. Our cost allows us to do that wherever we choose to do. And that will be one of the interventions that we'll be making in the second half, but not the only one. I mean, there's going to be investments in marketing. There's going to be investments in better execution that overall will drive the business growth to where we think it will be structurally in the coming years.

Thank you. One moment for our next question. Our next question comes from Peter Graham with UBS. Your line is open.

Thanks, operator. Good morning, everyone. So I was hoping to get some color on Latin America. Organic revenue was the weakest we've seen in some time here. And I think in the prepared remarks, you know, Brazil and Mexico seem solid. So just curious kind of what drove the weakness in the quarter. And then, Ramon, just as we look ahead, you mentioned you still expect strong growth from international in the back half of the year. How does Latin America fit into that equation? Would you anticipate improvements? or should we expect more muted performance to continue? Thanks.

No, I think, again, I would look at LATAM and all the international business in like six months rather than three months and three months. There's a lot of moving pieces between the first quarter, second quarter, Chinese New Year. In particular, the LATAM situation in our case is related to Mexico. And Mexico, because of the elections, there have been some changes in disposable income given to the families by the government that created some, I would say, some abnormalities in the way those funds were distributed. And that's impacted demand in Mexico in the last – what we're seeing in the last three weeks in Mexico that as those funds have been given back to consumers again, that the demand has come back to our category. We don't foresee an issue in LATAM. LATAM, again, value continues to be a factor, as it's always been in LATAM. We'll see plus and minuses between the different countries, but as a region, LATAM continues to be a high-performing region for us where we keep developing the categories and we keep expanding our margins and building scale businesses, not only in Mexico and Brazil, but across multiple markets.

Thank you. One moment for our next question. Our next question comes from Filippo Filoni with Citi. Your line is open.

Hey, good morning, everyone. So just staying on international business, Ramon, you sounded pretty confident on the growth in international. Maybe you can talk more about like what regions do you see the greater growth potential in that business? And going back to the question on guidance on top for the second half, is the improvement in organic sales mainly driven by an improvement in North America or an acceleration in international? If you can give some color there, it would be helpful.

Yeah, Filippo, hi. You should assume that most of the incremental acceleration of the business comes from mostly North America, right? right and and and the two factors i mentioned quaker uh will get back to growth um you know the labs get better for north america and then some of the uh interventions we're making both in value and in additional a m should drive additional volume those those are the the three factors internationally we're assuming that you know the the rate of growth for the first half we continue in the second half and and again uh we're we're seeing parts of the portfolio you know, accelerating parts of the portfolio, kind of stabilizing some of them being a little bit softer. But overall, the portfolio at this point is broad enough. We have enough scale across multiple markets that, you know, we're kind of hedged geographically. So that's what we're assuming and what we're seeing that, you know, the per-caps growth of the category will continue. We continue to invest meaningfully incremental funds to both execution and brand development. And we don't see any reason why not. Of course, it could be big geopolitical reasons why we change our mind later in the year. But with the information we have today about geopolitics and the stability of countries, that's our best guess today.

Thank you. One moment for our next question. Our next question comes from Robert with TD Cowan. Your line is open.

Hi, thanks. A couple questions. One is, I was hoping you'd give a little more color on the energy drinks category. Growth has slowed dramatically in the US. I just wanted to get your perspective and ask, do you think that consumers there are making a value decision as well? There's a lot of premium price drinks there. Do you see any evidence of trading down to maybe higher caffeine carbonated drinks? Thanks.

I think fundamentally the energy category continues to provide long-term good prospects for our industry. I think it's a consumer need that will continue to be there, and whether we're able to satisfy that through multiple options, that will continue to grow. small ups and downs of subcategories within LRB that you could argue, is it because of channel dynamics? Is it because it's very hot and people are moving to other parts of the portfolio? Like we're seeing, for example, in our case, in the recent six weeks, a massive growth in our hydration portfolio because obviously it's been very hot in the US. So I guess there is some cannibalization between energy and hydration for some consumers and they prefer to do that so I wouldn't over read into the short term of the category I would I would try to think about this as a the consumer needs energy if we're able to provide energy in a you know in a consumer friendly way including price probably as you mentioned but I would say functionality clean labels I mean like a lot of the things that I think the category has been working on there should be a good runway for that segment of the category, and it's been value-creating for a lot of us that participate in it, including the retailer partners and the brand owners.

Thank you. One moment for our next question. Our next question comes from Andrew Texier with J.P. Morgan. Your line is open.

Thank you. Good morning, everyone, Ramon, Jamie. My question is on the bridge to the mid-single digits organic sales growth in the second half. Assuming international, Ramon, you just mentioned, grows the same kind of mid-single digits into the second half and, of course, understanding the easy comps for Quaker, it still implies a good inflection into AFRITO and PB&A. How do you think, like, we should be thinking about the progress and perhaps, you know, related to that from a channel perspective, be away from home for you growing from what it seems to be like a distribution? What is the like for like in sales basically by channel if you would think about away from home and at home?

Yeah, Andrea, it's Jamie. Yeah, on the acceleration in the back half, as Ramon mentioned, that's going to come mostly from North America for the reasons we cited, and we're making the investment primarily focused North America. We've got the easier laps and Quaker, so that gives us a lot of confidence. On channels, look, away from home has been a focus area for us. We've put investment behind that, and it's outgrowing the balance of our portfolio, so we'd expect that to continue.

Thank you. One moment for our next question. Our next question comes from Chris Carey with Wells Fargo Securities. Your line is open.

Hi. Good morning, everyone. Ramon, I know you mentioned international could be looked at on six-month cadence. I was wondering, however, if you could comment on some specific regions just in Europe Why, to your mind, have trends been so resilient? I don't think it's just your portfolio. I think the region in general has been more resilient for longer than many expected. And then in Asia, I think you were clear last quarter that there was some timing benefit. Clearly, we saw that normalized this quarter. What's the right run rate for this division? And do you have any comments on the progress in China? Thank you.

Yeah, so listen, again, we're looking at international as a portfolio of geographies and markets. And we see the portfolio kind of when it's not growing so much here. So at the end, historically, we've learned that the portfolio is quite diversified, and that gives us the opportunity to talk about an international business as a total. Obviously, we run the business locally. Now when you go down to different parts of the world, Europe is resilient. Our business has been performing very well both on top line and share and very importantly in margin improvement. And that has been a focus of the management team for quite some time. We're getting a lot of traction. That's also giving the business the opportunity to reinvest, which also obviously drives the top line. And I think Europe, in our case, is in a very positive cycle, which we expect to continue in the coming years. Now, I talked about Latin America, so I will not mention much. We continue to see a lot of growth in many parts of our MISA region. In particular, India is a big growth space for us. And it's an investment area for sure. The opportunity is massive. You think, you know, you take a decade perspective and we're putting infrastructure on the ground and we're putting a lot of, you know, investing in the brands, make sure that we build the scale to capture what is going to be, I think, a high demand market for many, many years. Then when it comes to Asia, we're seeing a, you know, a very cautious consumer in China the consumer is is clearly you know saving saving more than spending and and that has an implication for many categories our categories is a low ticket item so we continue to see good performance of our categories and we're gaining shares it's quite an advantage business what we have in China especially on the food side and we continue to invest in In different regions of the country, we continue to get more penetration, additional distribution. That has been a big driver. So additional penetration, additional consumers coming to our brands, coming to the habit of snacking, and that has been very positive. So in spite of a cautious consumer, we have levers to continue to grow the business. Some of that physical availability, some of that is share of market and better penetration of our brands. I think we have advantage products there. We have a very strong R&D center in China that develops East for East products, and that is giving us an advantage versus other companies. So that's how we're seeing the different parts of the world. And again, we'll continue to invest for us. This is a business that, if you think about our international business, it's almost $40 billion already, right? So it's been growing very fast over time. It's almost $40 billion. It's accretive to PepsiCo. It's higher margin than the average of PepsiCo. And it's clearly the largest growth opportunity for our company if you think about the next decade. And that's where we put in so much focus, so much investment. We believe that both on the beverage side and on the food side, we have many years of growth in that particular part of the business.

Thank you. One moment for our next question. Our next question comes from Robert Ottenstein with Evercore ISI. The line is open.

Great. Thank you very much. I want to look at a more structural, strategic type question, and that is to get your thoughts around the Carlsberg-Britvich transaction and maybe talk a little bit why perhaps it made more sense for Carlsberg to buy Britvich rather than you. You know, given the fact that you generally own your bottlers in the U.S., why not Britvic? Does that have any implications in terms of how you're thinking about the U.S. bottlers? And does the fact that, you know, maybe combining beer and CSDs makes more sense outside of the U.S., obviously, for regulatory reasons? You know, how should we think about that component? Thank you.

Yeah, I wouldn't extrapolate too much. This is a decision by Carlsberg to make an investment in the UK business. It makes a lot of sense for Carlsberg for multiple reasons. And we partner with Carlsberg in other geographies. We are very happy with the partnership. We trust them as a partner to grow our business. And of course, we supported the transaction. So yeah, I wouldn't over extrapolate it, let's make it a UK decision by Cosberg, and we decided to endorse the transaction because we have a great relationship with Cosberg and we trust them.

Thank you. One moment for our next question. Our next question comes from Carlos Laboy with HSBC. Your line is open.

Yes, good morning, everyone. Ramon, in keeping with the last two comments you've made and the BRITVIC deal, can you discuss the international franchise doctrine of PepsiCo. In other words, how are you thinking in terms of clarity of what each side is supposed to do and allowed to keep, right? I'm trying to get a sense of how you're compelling independent bottlers in these great growth territories that you see to step up investments for the purpose of accelerated system revenue growth and bottling returns.

Yeah, Carlos, listen, we're very pleased with the relationship we have with most of the bottlers on this strategic alignment. Actually, our international beverage business has been one of the growth engines of the company for the last few years. So, you know, we keep innovating and building great products that, you know, have consumer appeal. And specifically, we've been very successful with our non-sugar products. business internationally or non sugar Pepsi it's been a great driver of growth for for many years Gatorade is also another great platform that we are moving around so you know the last is growing 10% historically in you know and we will continue to invest now other other opportunities to to scale up some of our bottlers. Of course, there's always opportunities to improve the infrastructure, and we're working on that for the long term. But I think this is a part of our business that is going well. It's a part of our business that we are prepared to invest even more. The bottlers know. We obviously are very aligned statistically on which markets and which platforms we're going to put our our focus and our investments. And I think, as I said, it's part of our international story that I was referring to earlier. There's a food story and there's a beverage story and there's a combination of the two stories in some markets that we're playing long term. So hopefully I'm answering your question. I don't know if you had some other kind of implications there.

Thank you. One moment for our next question. Our next question comes from Nick Modi with RBC. Your line is open.

Yeah, thank you. Good morning, everyone. Ramon, I was hoping you can just kind of share some perspective around overall food volume, right? Because a lot of questions have been asked about where's the volume going? It's not just salty snacks that's been under pressure pretty much across the board in terms of volumes. And so I was just curious on your thoughts. I mean, I don't think it's GLP-1. I know that's what some might suggest. but I'd love your views on kind of where you think the volume is actually migrating.

Yeah. I think, I don't know about, you know, uh, all the categories. I know that for, for many categories, the, uh, multiple year, uh, inflation that we had to take because our input cost went up as created some, perception and some reality in a lot of households that food is expensive and consumers are making choices and they can make choices to cook versus buy finished goods or finished products or they can make a lot of decisions around how they spend their money and how do they feed themselves every day with the lowest budget and I think that's the fundamental question to address for the for the food companies now that our costs are kind of normalizing our input costs and we've all been going at productivity in our case this has been a very very strategic focus for us now how do we deploy those record resources against what are the best levers to reignite growth and and again it will not be a you know a blanket approach It will be a segmented approach. In our case, it will be very rational. It will be based on data. I think we have a lot of data, and we have great segmentation. And I think we can execute with, again, with precision so that we don't destroy value, but we create value for the category as we increase the net revenue of the category. So that's how we're thinking about it. I don't think GLP at this point Nick has material impact in our category for sure, and we have a lot of panels, and we have a lot of conversations with consumers. It's not impacting us. At this point, it's an economic value relationship for our categories, and we will address them in the second half of the year.

Thank you. Our last question comes from one moment. It comes from Kevin Grundy with B&B Paribas. Your line is open.

Great. Thanks. Good morning, everyone. Covered a lot of ground, and not to beat the dead horse, but just to drill down a couple areas, Ramon, if we could, on the demand weakness and SNAC. So you mentioned some parts of the portfolio, but not all consumers. I apologize if I missed this. What are you seeing beyond the low-income consumer? There's a lot of focus on where's the consumer, and it depends on which management call you're listening to or what industry, frankly. What are you seeing specifically with the middle and high-end consumer? Is the weakness also being seen among that cohort as well? And then I think an important question as well, is there anything you're seeing in your market research, I know you're staying close to the consumer, that gives you any pause with the longer-term outlook for the Frito business, which has been so strong for so long? Is there anything there that kind of gives you pause or do you do this to be entirely transitory? So thanks for that.

Yeah, thanks, Kevin. Listen, I think this need for value or more value consciousness, I think it's impacting every household in the U.S. So it is different levels of income. I think it's impacting everybody. And we're seeing behaviors in different income levels would I would aggregate all that the consumer is much more price conscious is looking for more more value across so maybe you see the higher income consumers that you know they're they're not going to expensive restaurants they're adjusting their behavior to more affordable restaurant or they stay at home and then you know they they create their own entertainment moments or fun moments at home so do you see different behaviors happening everywhere I think they are the the connecting The connecting line would be the consumer is more cautious, the consumer is more choiceful, but the consumer is willing to spend in areas where they see value, and we see it in our category, the parts of the category that I was referring to. But also for other parts of the category, they're asking for more value and they're willing to compromise in some of their decisions. So that's the problem to address. So I would stay there and I think once we address that situation, we will be back in growth and we feel pretty good about the tools and the resources we have and the actions that we're taking and we're quite encouraged by recent performance of the business. Okay, so I think this is the last question. So thank you everyone for joining us today and your thoughtful questions. and also obviously for the confidence that you've placed in us with your investments. And we hope everybody has a great summer and that you buy a lot of PepsiCo products. So thank you. Thank you.

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