Coca-Cola HBC AG (CCH) Earnings Call Transcript & Summary

Thank you for standing by, ladies and gentlemen, and welcome to Coca-Cola HBC's conference call for the 2024 First Quarter Trading Update. We have with us Zoran Bogdanovic, Chief Executive Officer; and Anastasis Stamoulis, Chief Financial Officer; and Joanna Kennedy, Head of Investor Relations. [Operator Instructions] I must also advise you that this conference is being recorded today, Tuesday, April 30, 2024. I now pass the floor to one of your speakers, Joanna Kennedy. Please go ahead. Thank you.

Good morning, everyone. I'm here with our CEO, Zoran Bogdanovic, and our incoming CFO, Anastasis Stamoulis. We'll start with some opening remarks from Zoran and then open the floor to your questions. Please keep to one question and a follow up, waiting for us to answer the first question before moving to your follow-up. We have about an hour for the call today, which gives plenty of time for a good discussion. Finally, I must remind you that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements in our trading update of this morning. And with that, I will turn the call over to Zoran.

Thank you, Joanna, and good morning, everyone. Thanks for joining the call. I am pleased to share an update on another quarter of good progress and the continued execution of our 24/7 strategy. We've delivered strong sales growth with good volume and revenue per case expansion. This is an encouraging start to the year, and our teams have continued to deliver despite challenging conditions in certain markets. Let me share a few highlights of the quarter. First, we continue to benefit from a clear focus on our 3 strategic priority categories: Sparkling, Energy and coffee all grew revenue in the quarter, driven by strong market plans, excellent execution and continued deployment of our bespoke capabilities. Second, we have continued to expand sparling and nonalcoholic ready-to-drink value share on top of the strong gains in 2023, a clear testament to the enduring strength of our brands and to our teams in market execution and customer relationships. A big thank you to all our people who continue to activate our markets with precision and passion every day. and to our customers and partners for their ongoing commitment and trust. And finally, this strong start to the year, combined with our 24/7 portfolio, our bespoke capabilities and great opportunities for growth gives us confidence in our full year guidance, and I'm pleased to reiterate that today. And now I'll share some detail on the Q1 performance, after which our new CFO, Anastasis, and I will be happy to take your questions. Organic revenue grew by 12.6% and volumes were up 1.8% and price/mix grew 10.6%. Reported revenue grew 1% as we faced currency headwinds. I am pleased by the level of volume growth we are delivering as well as the continued improvement in the value of every case we sell. Our revenue growth management tool kit allows us to maintain this consistent improvement and balance. Pricing has been an important lever this quarter as we have navigated specific challenges relating to currency devaluation in Nigeria and Egypt, sugar tax in Romania, the implementation of deposit return schemes in the Republic of Ireland and Hungary and continued, albeit lower cost inflation across our segments. Revenue growth in the quarter also benefited from pricing taken in 2023, an impact, which will clearly reduce as we move through 2024. Mix and volume are also both improving as we address and adapt to the range of affordability and premiumization needs for our consumers. Our 2024 plans are full on tailored initiatives. A good example is the launch of affordable entry packs, such as the 300 ml PET, which had great success in Bulgaria over the last 2 years that we are now launching in Romania, Hungary and Croatia. We also continue to see premiumization opportunities across our markets. For example, with the ongoing innovation in Adult Sparkling, our focus on glass package formats in the out-of-home channel and on multipacks of single service for the at-home occasion. This sustained attention on improving mix is driving good results with total single-serve mix up by 210 basis points overall in the quarter, and by 230 basis points in sparkling. Now turning to performance by category. Sparkling volumes were flat in the quarter. Trademark Coke grew low single digits led by Developing and Emerging. One of the most important occasions for our consumers and customers is drinking the coke alongside the meal. This quarter, we benefited from the Recipe for Magic campaign created for this occasion, which were specifically linked to transactions driving activations. We continue to see momentum in low and no sugar variants, which grew well in the established and developing segments benefiting from Coke Zero, best coke ever campaign in Europe. Adult Sparkling volumes grew low double digits, driven by Schweppes, and in particular, Kinley, which delivered over 20% growth. Energy volumes grew over 37%, even against strong comparatives with good momentum, particularly in emerging markets. We launched Monster Energy Green Zero Sugar in 15 markets on top of three launches in Q4 last year. Our segmented approach to coffee is working well and coffee grew by over 34%, led by good performances in Developing and Emerging. And this quarter, we have seen strong growth in Caffe Vergnano as we continue to expand our coverage of premium outlet. Steel volumes grew 2.5%. We are focused on improving our profitability in water with ongoing targeted revenue growth management initiatives. Water volume grew overall even with our focus on profitability, benefiting from good performance in the Emerging segment. And I'm really pleased to see sports drinks growing high single digits. premium spirits volumes increased by nearly 15%, and our integration of Finlandia Vodka is well advanced as we expanded distribution to our further 17 markets. It's early days, but I'm really excited about the opportunities here, especially in the stability with our core portfolio. I'm super proud of our sustainability leadership and packaging circularity continues to be a focus. Deposit return scheme went live in both the Republic of Ireland and Hungary in the quarter. In Nigeria, we are investing in first-ever Coca-Cola system owned and operating packaging collection facility. We are establishing the infrastructure for gathering plastic bottles for recycling, working with local collectors and recyclers. We expect the first center to be fully operational later this year, initially collecting around 100 tons of plastic bottles per month contributing to our Mission 2025 goal of collecting the equivalent of 75% of our primary packaging. Turning briefly to performance by segment. In Established network revenue grew by 5.1%, led by strong price/mix of 9.3%. Volumes overall declined, but we've seen good performances from Coke Zero, Adult Sparkling and Energy. The phasing of pricing into the market in 2023, combined with tough comparatives on volume in Q1 have been important drivers of the shape of our top line growth this quarter. As the year progresses, we expect to see some of this pricing roll off and some recovery in volumes. In developing markets, net of revenue grew by 12.5%, led by a strong price/mix of 8%. We've been really pleased to see the continuation of volume recovery that we called out at our full year results. Again, our strategic priority categories are leading with sparkling up mid-single digits led by strong performance from Coke Zero and Adult Sparkling offerings. And coffee was also up high single digits despite tough comparatives. This is a great evidence of how our teams have been able to adapt to inflationary and regulatory pressures with critical pack and price adjustments. Moving on to emerging markets. where organic revenue expanded 19% with volume growth of 3.2%. We faced two sizable currency devaluations in the segment this quarter in Nigeria and Egypt. I'm very proud of how prepared our teams were for these challenges with ready-to-go execution plans that allowed us to adapt to this environment. Our African businesses offer incredible long-term growth opportunities. We remain agile and poised to adjust to any market conditions enabled by our bespoke capabilities. In Egypt, we saw a mid-single-digit volume decline in what was a challenging consumer environment and felt some pushback against Western brands. That said, we are gaining share risk our largest competitor, and I'm pleased to see the continued progress of our market-leading Schweppes brand. Meanwhile, in Nigeria, we saw volume growth in the high teens and value share gain despite purposely driving strong price/mix. Our targeted plans, bespoke capabilities and execution in the market has allowed us to continue to drive joint value with our customers in coordination with Coca-Cola Company. Nigeria is just one of many great examples of how our team's brilliant execution, enabled by strong capabilities ensures that we are well positioned to fully benefit from the growth opportunities in our diverse market even in challenging circumstances. As we look to the rest of the year, although we are mindful of the broader macroeconomic environment, we remain on track to deliver against our financial guidance in the year ahead. and to make further progress against our medium-term growth targets. Finally, I would like to thank all our people for their tireless efforts. They are at the heart of what we do. It is their passion and dedication, along with our commitment and trust of our partners, the Coca-Cola Company and Monster that enables us to keep delivering for our customers and consumers. Thank you for your attention. I will now hand back to the operator, and Anastasis and I will be happy to take your questions.

Thank you. This is the conference operator. We will now begin the question session. [Operator Instructions] The first question is from Matthew Ford with BNP Paribas Exane.

Zoran, Anastasis. So my first question is on the full year guidance. Obviously, with the strong start of the year, you've reiterated your full year guidance on sales and EBIT. But just wondered if you could kind of give any sense of the phasing between H1 and H2. If I look at the company consensus, H1 has like-for-like sales kind of 1.9% in the first half and 4.4% on like-for-like EBIT, just any feel you can give for the phasing and what we should look out for there? And then that's my first question. I'll follow up with my second afterwards.

Matthew, thank you for your question. So as you rightly said, first of all, I would like to just emphasize that on top of the strong start of the year that we have in the quarter, we are confident to reiterate our guidance for the full year. And in terms of the phasing, every quarter plays its role versus also what we are cycling. And with that, I'll just hand over to Anastasis to just give a little bit more light.

Before I go to that, let me just say how pleased I am to be here today and particularly coming to the role at this time for [ her lending ]. So back to the phasing question, you're right. In 2023, we had a very strong EBIT performance in half 1. Of course, this was heavily supported by the good leverage of the price increases and the better volume elasticity we had not originally anticipated. Now having said that, that phasing was pretty abnormal. Our normal phasing is weighted towards the second half of the year, that has been the historical trend. So given what we know today and as Zoran said, we would expect that 2024 will be a more normal year, meaning that they would be more phased towards the second half of the year. And from what we see, we believe that this is pretty consistent with what consensus is expecting was back. So second half of the year is where we expect to see more.

Great. And the second question is actually just on Nigeria. You've had clearly a strong performance from a volume perspective and no doubt pricing in Q1. And you mentioned and you called out the kind of the impact of strong execution on the ground. I just wondered if you could go into any detail about how you're able to deliver quarter after quarter of strong volumes in what is clearly a challenging market. And any sense of what you expect in terms of volume growth from Nigeria for the rest of the year? Do you expect this momentum to continue or moderate as the comps to get a little tougher?

Yes. it boils down to the fact that we really consistently now for years are intentionally investing in our capabilities in Nigeria, and that truly makes a big difference. Nigeria, as I mentioned probably a few times before, is the market where a number of our capabilities that we deploy across the group very often start in Nigeria, because for such complex and diverse market, having strong capabilities is exactly what enables us to execute, respecting various differences that exist between the regions, channels socioeconomic segments that exist in the country. So those strong capabilities are key in deploying excellent portfolio that we have in the country. which also are supported with strong marketing plans developed by -- together with the Coca-Cola Company. So every quarter has something unique. Q1 was an example of our music activation with the Coke Studio that worked very well. So coming back to capabilities, this is a market where, for the first time, we are doing together a blending of data that comes from the core of the company for consumer level and from our end on the customer level, and that really enables us to go to the market with a different level of precision than what we used to be -- to do in the past. And this is where informed by such data insights analytics. This is where then revenue growth management plans are really strongly deployed with our route to market. where we are continuously investing both in the capacity of our people on the ground, but also there are continuous upskilling. So all that plays a critical role. And last point, Matthew, I will highlight is that part of our strength in Nigeria is continuous investment in our technical capacity and capability that we have in the country because our ability to continuously produce and deliver the product no matter of various types of challenges. I really think it's another source of strength to serve our customers on a continuous basis.

The next question is from Simon Hales with Citi.

So my first question, really just following up on Nigeria, if I can, sort of Zoran. I'm just trying to understand how the year will develop from here, particularly the balance between volume and sort of price mix as we should see it. Obviously, clearly, you had a strong volume performance in Q1. I assume that was helped to some degree by the easier comp at the beginning of the quarter versus last year, we had the tender issues in Nigeria. But if you could just provide a bit more color in terms of the pricing that you've taken in market in Q1 to offset the currency devaluation and perhaps how volume momentum has moved through the back end of the quarter through March and into April to help us perhaps with our forecast going forward on volumes. That's the first one.

Yes, Simon. Nigeria is a market where we feel confident that both volume and price/mix will be drivers of our revenue generation. So you're right. We had easier comps, knowing that last year, we had that bank note situation. However, we have seen in the quarter that our volumes in Nigeria have just gone from stronger to stronger we are confident that we will see a continuation of the volume growth across the quarters. But the balance and the ratio of volume and price mix will depend on the market dynamic macro situation for each quarter. So we are confident that Nigeria will be a double-digit revenue growth this year with both contribution of volume and price/mix. And as you said, just to make a point on Q1, I think this was really a good demonstration where even though we expected that some form of devaluation will come, when it came in January, the speed with which team has reacted leveraging our revenue growth management framework. -- and being ready in matter of days to -- with a new plan and full execution. And on one side, driving very strong price mix, but on the other side, also delivering strong volume. I think it's a very good testament and proof point of what this revenue growth management capability really means for us.

That's very helpful, Zoran. And then secondly, sort of associated with Nigeria, but more broadly, obviously, at the group level, you've kept your FX guidance for the full year. I was a little bit surprised and maybe what hasn't improved a little bit, given that the naira has come back from its recent lows. What's driving that? Is it just the fact that we've got the Egyptian pound devaluation, which means overall, the FX is back where it started, if you like, for the full year in terms of guidance?

This is Anastasis. Yes, actually, we have seen the naira rebounding in the last month. But let's not forget that this is on a back of 50% evaluation in '23 and 30% as Zoran said in the beginning of the year. which still pretty much puts it at about 60%, 65% on a year-over-year basis. And as a matter of fact, what you've seen over the last days is that it's going back to devaluating I think yesterday, it closed at 1,342 to the dollar, on the NAFEX. So with that in mind, we are keeping our guidance to the EUR 30 million to EUR 50 million as a headwind from a translational element. As a reminder, the FX calculation is based on the spot rates. So -- and for that reason, we are providing a range in order to assume that any volatility within the movement of the naira will keep us where we are. So we don't see, at this stage, any region that we should change our full year guidance for the FX impact.

The next question is from Sanjeet Aujla with UBS.

My first question is really around coming back to the established markets. You had a pretty weak volume performance. I appreciate there's some phasing dynamics here. But can you just talk a little bit more about how you expect established volumes to develop going into Q2 and Q3 in particular? And if there's anything noteworthy you'd call out on April trading so far just given the perhaps weaker weather that we've seen?

Yes. On the established, let me just first say that I'm really pleased with the progress that we have made in our established segment. If let's say, 5 years ago, if you told me that we would be driving that level of revenue per case that we have been doing through [indiscernible] to navigate these high levels of inflation. I would really have thought this would not be possible or really would be very hard. And -- but really with -- in parallel development of data insights, and revenue growth management. This really enabled us to do that in a well measured and thought-through way. Now just a reminder also that in Q1 our volumes declined by close to 4%, but at the back of what was the strongest performance of last year in Q1, which was 6% up. And for us, important prioritization it was, how do we drive the revenues in the segment. And that's why I'm very pleased that we came with this mid-single-digit growth in the Established. We are positive that Established segment will be positive and will have a volume growth on a full year level for '24. And also, we do see that April trading is indicating that direction.

Great and I'd just like to follow up on the Italy sugar tax. Can you just remind us where we are on that, the plans that you have to offset that and the magnitude of that which I think is still a job for July if I'm not mistaken.

Yes, the latest info like last time, nothing has changed, that it stands for July '24. I would just say that it's not live until it's live. But knowing that this has been something that is in anticipation for quite some time. I think it goes without saying that the team is fully ready with a plan to be executed as soon as it's absolutely clear that this is going live. So same like we've done in other markets. This is where the whole revenue growth management framework and tools are fully ready, both with price by different pack and category as well as the promotional plan. And in case this happens, the anticipated price increase would be anywhere between high single digits and low double digits based on -- depending on a pack and depending on the final treatment of the Zero variance versus the full sugar variance. But in short, fully ready and really don't see that as any barrier that would undermine our expectations and believe what Italy as the market we'll keep bringing in the years ahead.

Next question is from Olivier Nicolai with GS.

Welcome back, Joanna. Two questions, please. First, in terms of the pricing environment, partly in Poland. You have a lot of local retailers who are taking up promotional activity across lot of products. You do not seem to be affected. Is it because of your category and your very strong market share, which makes you a bit more immune or is that something which could be an issue later this year? And just going back to the guidance on organic EBIT growth, are you planning any big step-up in marketing, which is embedded in the guidance, which you were probably not expecting to do a few months ago? Thank you.

Yes, Olivier, thank you. So firstly, I'd like to remind and say that we are very pleased with the performance of the business in Poland, which follows the same pattern of us continuously building and developing both strong portfolio in the country and very strong capabilities. And we see now for several years that the business is performing very well. I would also particularly call out importance of our key account management capability, which knowing the market landscape over there and customer landscape is a critical capability. And it is kudos to the team that really transform the way we work with our customers and within creating a shared value. That's why we see continuous strong market share gains. And we see that growth is driven by sparkling. This is where we have a very strong [ active ] business. We also have a growing and strong business in coffee. So in terms of the competitive landscape, we know that we are also for some time, benefiting from being in an important biggest customer on our own situation that at some point, probably will change. It's reasonable to expect. However, I think that the team has used really well the situation to solidify and further strengthen the business. And we really remain poised and ready to continue to play to win in Poland. Second question you said, if I remember about marketing plans for the rest of the year. Am I right?

Yes, that's correct. I'm just wondering in the context of that EBIT guidance not changing after a strong Q1. I was just wondering if that was assuming a bit of a step-up in marketing, particularly ahead of some key sporting events this summer.

There are two different things here. One is that we do have, together with our partners, primarily starting with the Coca-Cola company, but also then with Monster and other brand owners, we really have a strong plan for the year. Most importantly, for sparkling is our key category. There are various programs and activations behind meals, which I referred to in my remarks, sports, football, we have Euro coming up, Olympics, yes and also -- so all that will be deployed with various dynamics and phasing across the countries with strong execution plans for the season. Now that's one element. Second element is that the reference to the guidance. The fact that we just exited the smallest quarter that we have, there is a lot ahead of us. We just simply feel that it's too early to make any change. That's why we reiterate the guidance that we provided in our last call. We really remain confident on how we will go through this year. irrespective of the environment that will be ahead of us.

The next question is from Edward Mundy with Jefferies.

Can I ask about the Established markets -- and you've already flagged that from a volume standpoint, you expect things to improve as you cycle through the easier comps. What I want to really understand is what are you doing to monitor affordability. You've got a lot of data, you've got a lot of insights. And how do you sort of -- what gives you comfort that you're getting the right balance and affordability given the big step-up in the revenue per case that you've seen in the last couple of years?

Good morning, Look, one thing I would say is that when we say these four capabilities, what it really means is that we are tailoring them to our, we believe, unique model, but also this is tailoring them and addressing the local needs. And circumstances that we have in the market. That's why when we see what we are doing in Italy, Switzerland, Austria, Greece is really uniquely addressing the relevant opportunities that we have in each of those markets. Now the RGA framework is taking into account both how do we ignite a volume as well as doing the price/mix, but also the part of that is how -- where to play with marketing programs that we have in the country. So it's a combination of all these drivers that is really specifically done. And in Italy, it is the -- we just exit a good start of music activation with relevant festival in the country to name something new, which we really saw as working well. And those type of events not only have the impact during the event itself, but it is also what happened afterwards and how we keep continue activating that. It is the activation of dedicated packages that we have in the market. In Italy, you know that a single serve is performing really well. which also comes as a result of our out-of-home strengthening and expansion of our capacity on the ground with increasing number of our market developers, increasing number of coolers also the segmented execution as a critical use case that we are doing as part of Data Insights analytics is very well deployed in Italy. And this is informing execution which degrees sorry, varies is how we execute in North versus South, where relatively our position has been traditionally weaker. So that's in a nutshell, what I would say, but I'll pause here to see if that answers your question or you need more color.

I suppose, still on that first question. I mean, I think historically, you sort of indicated that maybe 2/3 of the strong revenue per case probably priced the balances all the other good stuff in terms of a back channel category mix that you're driving? Is that still sort of what you're running with?

Yes. Yes. I mean this year, even though the ratio between volume and price/mix is going to, let's say, be more balanced than last year. However, it is fair to say that more will come from price mix this year then from volume. However, for us, this year, volume generation is important, focused on that. And we are positive that we will have volume growth overall in the Established segment and also in Italy, particularly.

Great. And my follow-up question is on your 24/7 portfolio model. I mean you talked to quite a lot of activation plans on sparkling and also in Monster, but I want to sort of drill into coffee and vodka. A little bit. Can you talk about some of your plans for 2024. It seems like you're getting both a big push? And what are your sort of objectives with both coffee and Finlandia as you think about the medium term?

Yes, exactly. Yes, coffee we call out as a prioritized strategic category, not because we just signed the coffee. But because the market data and data are informing how big and profitable revenue pool that is in the market. That's why we also have to respect that in such category with very respectable competitors. For us to be able to achieve our objectives of continuous revenue growth, we really have to build our eye to win. That's why we've been from the start of our journey, which started in mid of 2020. We have -- we are consistently investing and front-loading in our teams, in our Coffee Academy, technical service, strong programs with both of the companies that we are working with Costa and Caffe Vergnano. So if I would say one thing is to consistently stay the course, build business in a quality way. We are not chasing volume just for the sake of volume. We really want to inspect the appropriate positioning that each of the coffee needs to have in its own segment, recruit targeted customers in each of the segments, and that's what we have been achieving quarter-by-quarter. Increasing the penetration and working on the transactions per outlet and increase in consumption eventually slowly but surely increasing our share like latest data is showing. So I just want to say on the coffee, this is not about 100-meter race. It's rather like a marathon in which we know where we are going. But it's going to come with a patient -- patient pace to really create a sizable business over the next several years. With Finlandia, we have integrated business end of last year, which means that we are now in the process of taking over from previous distributors in the countries where we didn't have our own distribution. Reminder that this was uniquely a relevant opportunity for Hellenic, given the fact that 60% of global business is in Hellenic territories, and we've seen how suitable Finlandia vodka is with many brands and categories in our core portfolio, forming stability purposes. And we are really seeing that we are committed to invest and develop brand further. We see a very good potentiality, and we really want to do it responsibly and in a quality way. driving the brand itself, but also driving through mixability, also the rest of our portfolio. So practically, with that, we have a good leverage and to how do we drive broader portfolio.

The next question is from Mandeep Sangha with Barclays.

If I could go back to the Established division, please. As I mentioned, volumes were a bit softer than maybe people expected. Could we dig into a bit more of the underlying dynamics in the market? Are there any sort of countries where you're seeing negative channel mix or potentially down trading as we head into the summer period? Or is the entree very much remaining very robust. And could you also comment on the promotional landscape across established and whether you've seen a step up this quarter as sort of COGS pressures have certainly eased recently.

Thanks, Mandeep. Yes, so in the Established -- first of all, let me start with a few specific examples. One is Italy, where I just want to remind that we said that throughout '23 and also in Q1, we've been prioritizing price mix and focusing on driving profitable growth in water. And we knew that, that might have impact on volume as it did, but it was really a deliberate choice. Because we recognized it was the right moment and time when we really needed to do so. We also said that throughout '24, we will have -- and we do have a focus on bringing volume to positive territory, and we are confident that we will do that in 2024. Season preparations are well underway and in Italy, and we have a very strong plan. So we really see that this is what's going to be one of the drivers. Another example in Ireland specific case where because of the DRS start on February 1, like in other cases, we do see that it takes several quarters until the market, meaning consumer adjust to the new reality because whenever deposit is introduced, I mean that requires some adjustment for consumers to get used to it. And typical reaction in the market is that there is a slowdown. However, we are confident, like in all other cases, where this has happened, that this is not going to be any barrier in continuing the growth trajectory in Ireland. Then in the established, we see what we saw last year and also a continuation in Q1, a strong performance in Greece. And this brings me to say a few words on the channel. We do see that out-of-home part is more resilient, and that's the part that overall for Hellenic brought actually growth and it came from [indiscernible] whereas the at home on a total group level was flat. And specifically in the Established segment, we do see exactly the same picture is that out-of-home performed better. And this was driven with two largest countries in the segment, which is Italy and Greece. In Switzerland and Austria, we have seen the opposite situation, which was also correlated with weather that was a little bit atypical and we felt it. Overall, on the promotional element for this year, we entered the year with strong promotional plans knowing that affordability is important in this dynamic environment. And promotions are a very important tool in our revenue growth management framework. So in the Established segment, it's no exception. Actually, in all the countries, our promotional plans are included. There is no one size fits all. Every market has a different dynamic, but I can only reiterate that this promotional driver is an important tool in Established segment for this year.

And just a follow-on. In Egypt, you sort of called out the boycott against Western brands that sort of continued into the first quarter. Could you share whether that sort of progressively got worse during the quarter and how it's trending in April? Or are we sort of seeing an easing of those boycotts against Western brands?

Yes. Yes. The fact is that there is a certain level of boycott that is affecting all international Western brands. This is where, in our case, like we see in the case of others, the most prominent brands get affected. In our case, this means that it is the Coca-Cola trademark that is mostly affected to a lesser extent, flavors and then to even smaller extent, Schweppes, which is a very important brand in Egypt. Just to remind that in spite of that boycott, we actually had in relative terms, a good performance of Egypt in our view, where we were only down around mid-single digits. And that was also thanks to a very good performance of water and also continuously good performance of energy. We have seen that in February and March, boycott effect has been easing and has been smaller than in January. And that trend of what we've seen in February and March has also continued what we've seen in April.

The next question is from Fintan Ryan with Goodbody.

First question for me, please. We noticed that the Poland has implemented a restriction on age limits for the energy drinks portfolio. And I note in the statement that you energy drinks in the market were down high single digits. I was wondering what -- there are two parts to this. Firstly, do you have any data in terms of how much of the volumes lost from the energy category were instead maybe shipped into your core sparkling. Or is there any other sort of data you can give around the reaction of consumers or the younger consumers obviously in the market of those restrictions? And then secondly, just is there any other markets where you think that within your portfolio where you think there's a risk that similar restrictions of regulations could be put in place?

Fintan. So yes, indeed, the regulation is there. It does have a certain impact because energy has been in a single-digit decline. However, this has been, I would have to really say it has been a smaller impact than we initially thought it may have, proves the strength of the category. And we remain positive that energy category will continue growing over the years to come in Poland. Hard to tell if there has been any switching to a category primarily sparkling really don't -- can't tell that. I wouldn't think so. However, yes, we'll keep monitoring this and happy to progress on how that's progressing in Poland. But just to reiterate, very strong energy business we have there. and great brands, which makes me confident that it will continue its trajectory. I'm not aware at the moment that we have, that we have anything else similar coming up in other countries. So nothing on the horizon at the moment.

The next question is from Charlie Higgs with Redburn Atlantic.

My first one is just on the price/mix, 10.6% in the quarter, very strong. Can you maybe just break that down between rollover pricing, new pricing, DRS impact and then perhaps the contribution from category mix and single-serve mix, et cetera. And then maybe just comment because the single-serve mix was very, very strong, up 210 basis points I think at the group level, single serve is already above 50%. So just a high-level view, how much further is there to go on improving single-serve mix.

Thanks, Charlie. So majority in the Q1, majority of our price mix came from pricing -- to a lesser extent, from the mix. In this quarter, this was also led with the fact that Romania had sugar tax driven pricing that in that case, we always do, plus we had two interventions, as you know, in Nigeria and Egypt, which also drove the pricing to be a much stronger driver. We would see that through the year, the mix plays more overall in the whole combo of the price mix. both in the category as well as in the package. On the package, look, there is still a huge opportunity in driving single-serve mix. This is our consistent focus how we drive it. And over years, year-on-year, we are seeing the improvement exactly because there is still so much space. Usually, when you see the weather markets, these are the markets that have much higher percentage of single-serve mix in the total volume, 50% and above, but the more you go Easter from Central Europe and then East Europe, this is where you see those percentages of single-serve mix on a much smaller levels. And that's why we are continuously working on the plants, both in the at-home channel, where we are working on the multipack single serve to increase and develop habit of consuming single serves at home. But also in out-of-home. So there is a whole variety of plans which are focused exactly behind single-serves.

Yes. Sorry, Charlie. If I were to add to your question on the pricing element of the quarter 1, we also see an effect from the rollover pricing from prior year actions. Which accounted for about -- actually more than half of the price increases. So on one hand, we have the pricing actions of 2023, and there on over, which accounts for more than half then, as Zoran said, I mentioned with pricing actions in Nigeria, Egypt to address the currency devaluations, the relevant regulation of tax and the positive mix.

And then my follow-up was just on energy drinks, where volume is up 37%, even with a weaker performance in Poland is pretty amazing. Can you maybe just comment on the launch of Monster Green Zero how that's been going? Is it cannibalizing from Monster Green or is it incremental? And then just a high level comment, are you winning share in energy drinks, it's quite a...

Yes. I think this addition of Monster Green Zero was really excellent addition in the portfolio because Monster Green is the key pillar in the whole Monster portfolio. And now having zero also option is exactly what's excellent for consumers. Maybe there is some overlap in cannibalization, but net-net, it's driving more consumption and more transactions as also evidenced with the results. So we see it as an excellent addition in all countries where we've launched, and I feel very positive about it.

The next question is from Philip Spain with JPMorgan.

My first question was just on the pricing you've taken to offset the FX devaluation in Nigeria and Egypt. Have you fully taken the level of pricing you would like to offset those devaluation based on where spot is at the moment? Or is there more pricing you have planned to take later in the year? And then my second question was just on how well hedged you are for your commodity costs for 2024? And if there's any risk you see from the recent increase we've seen in aluminum prices, for example.

Yes, exactly, Philip. On the -- look, there was anticipation that some depreciation of the currency will happen. That's why we had a standby plan. And we learned one thing is that we don't take pricing in one go or one size fits all across all categories. That's why there is a very dynamic plan, how we look at it and what are the right moments in the year. It goes without saying that the moment it has happened, we have made an immediate reaction. But that also means that there's going to be some other price adjustments as we go forward. In the right timings given also the competitive landscape, regional differences. So that's where we are.

There was a second question on commodity hedging, right? I understood correctly, Charlie. And yes, I think what we can say is that we have made good progress on our hedging positions over the quarter. Today, we have hedged over 70% of our key commodities with actually being better heads against the sugar and aluminum less with PET. We are better heads in half 1, but we expect also this hedging positions to increase as the year progresses. And with that, I can say that we are confidently sitting with our guidance on the Coke per case expansion of low to mid-single digit. So no further risk from that perspective.

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

Two from me, please. The first one is about the DRS introduction in Ireland and Hungary. If you could talk a bit about how the consumer and the trade is adapting to that any different from your expectations? And are you aware of -- are there other markets that you're aware of where there are plans for deposit return scheme. And my second question is just going back to Egypt, net of the boycott impact, how is the consumer environment there? How is the consumer coping with a sharp devaluation. Clearly, you're outperforming the market. But when you put everything in, when all considered, would you -- is it fair to expect 2024 to be a more difficult year for volumes in Egypt. Thank you.

Andrea. First on DRS in Ireland and Hungary they are very fresh with the start, Ireland from February 1, and Hungary actually has the 6-month transition period until like a fully fresh start from July. Look, the reaction of consumer is usual that on top of our shelf price, this is where our deposit also comes into play, which consumer initially has to pay before they learn how they will get money back once they -- so that's the period of adjustment where consumer really goes through education of that. This situation can also have, let's say, over time, also some positive effect on the retailers. [Technical Difficulty]

[Operator Instructions] Ladies and gentlemen, connection with speakers is now connected.

Can you hear me?

We can hear you loud and clear.

Okay. Andrea, what was the last thing you heard. So I'm not sure. Andreas, are you there?

Mr. Pistacchi, your line is open.

Yes, we lost you just started to answer my first question on the DRS impact. You said that, of course, increase in the shelf price, but then you're saying over time some positive effect, and that is where we lost you. [Audio Gap]

Here, our IR team will follow up with a question just to make sure that you get the full input on your questions. So in Egypt, not easy situation for the consumer, especially with very high inflation that happened last year. Still, there is a high level of inflation us and other players in the market are reacting with the price increases as we all have to but we are really doing that in a mindful way, really paying attention to our affordability need that consumer has in Egypt. And we are pleased with the way how also the trading has developed sequentially in the quarter. Also trading in April indicates same trend. And we are positive that this year, we would see a positive volume growth in Egypt.

Thank you and I'll follow up with the team on DRS.

You're welcome and apologies for this disruption with audio.

[Operator Instructions] Gentlemen, Ms. Kennedy, there are no more questions registered at this time. The floor is back to you for closing remarks.

Thank you, operator. And just to recap a few points from the call today. This was another quarter of good progress and an encouraging start to the year with the continued execution of our strategy delivering high sales growth through good volume and revenue per case expansion. We continue to benefit from focus on our strategic priority categories with sparkling, energy and coffee, all growing revenue in the quarter. We continue to add share, building on already strong gains in '23. Today, we reiterated our guidance for '24 that we share at full year results. Thank you very much for your attention. And with that, I close the call and wish you all a good day. Thank you very much.

Ladies and gentlemen, thank you for joining. The conference is now over, you may disconnect your telephones.