Coca-Cola Europacific Partners PLC (CCEP) Earnings Call Transcript & Summary

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.