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

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.