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

Good day, ladies and gentlemen, and welcome to Coca-Cola HBC's Bitesize Investor Series. Today's event is Nigeria Deep Foundations: long-term growth. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to Jemima Benstead, Head of Investor Relations.

Good afternoon, and welcome to the second in our series of Bitesize investor events at Coca-Cola HBC. Before I hand over to our speakers, let me quickly remind you of what our Bitesize investor series is. The aim of these events is to provide deep dives into areas of the business that are important drivers of our strategy and investment case and especially the ones you've told us you want to hear more about. The first event of the series took place in October last year on one of our key capabilities, data insights and analytics. And today, we shift our attention to one of our key markets, Nigeria. We have with us our Chief Operating Officer, Naya Kalogeraki. And from the Nigerian business unit, we have Goran Sladic, our General Manager for Nigeria; and Dayo Adefulu, our Trade Marketing Director. Quickly on the format today, we will have a presentation from the team, followed by Q&A. As you just heard from the operator, we can take questions live on the call, which I will; or if you joined in listen-only mode, you can enter questions into the platform, which i will then ask the team. I also must remind you that this presentation and Q&A session may contain various forward-looking statements, which should be considered along with our cautionary statements at the end of the presentation. With that, let me pass the call over to Naya.

Thank you, Jemima, and hello, everyone. It's great to be back with you for another one of these Bitesize events. Today, I'm excited to be joined by Goran and Dayo as we take a closer look at the Nigerian market. We will delve deeper into why Nigeria is an exciting opportunity for CCH, what's driving our success there and the growth potential we continue to see in the future. As you'll see in today's session, Nigeria is not just one of our largest markets. It's a dynamic, fast-evolving landscape, where we're seeing real momentum. It plays a central role in our growth ambitions and is a key pillar of our strategy. But first, let me provide a bit of context for those of you who might be newer to the CCH story. We benefit from a diverse portfolio of 29 markets with strong growth potential. We see this as one of our key strengths, covering a wide span of countries, all the way from our established markets across Western Europe to developing and emerging markets in Eastern Europe and of course, Africa. In the past few years, our execution excellence enhanced by our capabilities building in a range of macroeconomic and consumer conditions allowed us to drive good financial progress across all of our 3 segments. The Emerging segment has been an important driver of growth, and we're excited for what's still to come. So why are we talking about Nigeria today? Nigeria is where it all began for Coca-Cola HBC. In 1951, A.G. Leventis founded the Nigerian Bottling Company, which today is CCH Nigeria. It's where we started. And importantly, it's where our emerging market strategy comes to life in full color. Today, we're the #1 player in both sparkling and nonalcoholic ready-to-drink, with our brands deeply embedded in local culture. As of 2024, Nigeria accounted for 15% of group volumes, making it our largest market by volume and in the top 5 when it comes to revenues. But what really excites us about Nigeria is the future value we still plan to unlock. Demographically, Nigeria stands out with a population of around 230 million, the largest in Africa. Culturally rich, Nigeria is a unique market, and it is fast evolving. The country is undergoing a significant cultural transformation with GDP growing and its economy diversifying and a strong focus on digital. For us, the scale of the market, combined with its vibrant diversity gives us a clear opportunity to continue recruiting consumers and deepen our connections with customers. Goran will share more on how we will capture this opportunity later in the presentation. I hear from [ Zoran and Anastasis ] and the IR team that the question investors are often asking is this, how is it that we succeed in emerging markets? There is not one simple answer or one data point I can point you to. It's a combination of many factors underpinned by our bespoke capabilities. I'm confident we have built a winning formula for success in emerging markets, and Nigeria serves as a prominent example of this. What truly sets us apart is our mindset. We don't wait for perfect conditions. We act on what we see as potential. This isn't just about boldness, it's about having a clear, repeatable strategy for winning in complex environments. Let me walk through some of these key elements. We strike a careful balance, focusing on what makes the local market unique and staying relevant, while aligned with group strategy, our global scale, tools and capabilities. As you know, we don't impose a one-size-fits-all model across our markets. We adapt to the local realities where it matters. We manage volatility proactively, turning challenges into opportunities. This isn't improvisation. It's grounded in rigorous scenario planning and empowered local teams. Our ability to accelerate comes from being ready to activate different paths based on a deep real-time understanding of the market. The team will share some Nigeria-specific examples of how we do this later in the presentation. Having a best-in-class leadership team to execute this strategy is critical, and Nigeria is no exception. I'm excited for you to meet some of them today. Our long-standing presence in Nigeria reflects our deep belief in its potential. Over the past decade, we've made meaningful joint system investments across our supply chain, but also in talent and our brands. Nigeria has also been a pilot market for capability building, such as revenue growth management and segmentation through data insights and analytics before we've rolled out the capabilities across our business. And as our track record shows, we have been consistently delivering strong volume growth and share gains and driven efficiencies. I'm really proud of this team and our leadership in Nigeria. Speaking of them, I hand over to Goran and Dayo to get into more detail.

Thanks, Naya, and hello, everyone. Very happy to be here today. I've been at Hellenic for 22 years, and my experience in Nigeria started exactly 10 years ago during the Premium Spirits business rollout. Since then, I've been National and Regional Sales Director and General Manager for the last 2 years. Today, Dayo and I will take you through the Nigeria story in 3 chapters that you can see on the slide here. Let's start with the attractive market opportunity. Nigeria is a unique market, and that gives us abundant opportunities for growth. With over 300 tribes and more than 500 languages spoken, Nigeria is one of the most diverse countries in the world. As we'll show you, this makes our digital tools and segmentation capabilities especially powerful here, allowing us to precisely tailor our approach with customers and consumers. Culturally, Nigeria is now a global powerhouse. Afrobeats, which originated here, has become a dominant force in the global music, with streaming growing 5x versus 2017 and globally recognized artists with millions of followers such as Burna Boy, Asake or Wizkid. Nollywood, the country's film industry, is the second largest in the world, producing over 2,500 films annually. And football is a national passion. Some premier league clubs have more fans in Nigeria than in the U.K. We actively tap into these cultural passion points to connect with consumers in a meaningful way and drive brand love and recruitment. Nigeria's position as a digital-first economy reinforces the need for scale, tech-enabled execution. Consumers are increasingly purchasing through smartphones, with platforms like WhatsApp and Instagram becoming vital for small business sales. Digital payment adoption is also accelerating the shift away from cash, while AI tools are improving customer engagement. Small- and medium-sized businesses contribute approximately 50% of Nigeria's GDP. And so we make sure our strategy prioritizes digital tools, route-to-market expansion and tailored support for small businesses to enhance customer experience. On top of this, the market has very attractive demographics. As Naya mentioned, Nigeria has the largest population in Africa, and it's forecasted to grow by around 2% annually, which means adding 30 million consumers in the next 5 years. Crucially, it's a young population. Nearly 70% of Nigerians are under the age of 30 with a median age of just 17. This results in a powerful engine for a long-term growth and sustained consumer recruitment. The consumer base is economically diverse and evolving with distinct consumer segments that are different in size and purchasing power. For instance, for the majority of the population, we know there is a strong demand for affordable products. However, Nigeria is also home to roughly 15 million affluent consumers. That's larger than the total population of Greece, for example, and it presents a clear opportunity for premiumization. We remain focused on serving all segments of the market, which is why we tailor our pack-price architecture and offerings to meet the diverse needs of consumers across all income levels. There's also significant headroom for growth in per capita consumption. Nigeria's sparkling per cap consumption currently stands at 72, well below our group average of 139, but it's moving in the right direction, and we've seen growth of nearly 20% in the last 5 years. The industry is expected to continue to grow volumes at a solid mid-single-digit rate, as you can see on the right-hand side, and this will help drive further acceleration in per capita consumption. So how do we leverage these demographics and market characteristics to drive growth? We do it through our leading 24/7 portfolio, tailored to win in Nigeria across segments and occasions. Sparkling is our core driver of growth. We have a strong and growing leadership position with our well-balanced portfolio across PET, RGB and cans. We lead with affordability through our returnable glass bottles. We are 1 of only 2 sparkling players competing in this format. And with our unique infrastructure, scale and reach, we are the clear market leader. At the same time, we drive premiumization through, for example, Schweppes in Adult Sparkling, but also different package formats, for example, cans. A great example of how we tailored our portfolio to Nigeria is with the Schweppes Chapman flavor, which was an innovation rooted in local taste preferences. Energy is our growth engine with a very strong 5-year volume CAGR. It now contributes double-digit percentage to our revenue, driven by a smart dual-brand strategy, positioning Monster as a premium lifestyle brand and Predator as an accessible high-quality affordable option. Juices and Premium Spirits are also important parts of our offering as both categories have high NSR per unit case, it helps us improve our portfolio profitability. We started distributing Premium Spirits in 2017 and have since scaled out our offering with brand partners to capture value in this premium segment. As a result, Nigeria is now the largest [ Macalar ] market across CCH countries. This balanced approach, affordability, premiumization and diverse category exposure positions us to win in Nigeria's diverse market. I will now hand to Dayo to explain more about how we are driving growth and leveraging passion points authentically in our 2 largest categories, sparkling and energy.

Thank you, Goran, and hello, everyone. I'm the Trade Marketing Director for Coca-Cola Hellenic in Nigeria, where I lead a team that works hand-in-hand with the Nigerian marketing team for the Coca-Cola Company to drive end-to-end marketing execution in Nigeria. Before joining CCH, I was the VP of Strategy for the Coca-Cola Company's Africa operating unit for 4 years until 2023. And before that, I was a consultant at Bain & Company. When it comes to sparkling, Coke Studio is a truly powerful example of how in close partnership with Coca-Cola Company, we engage with cultural momentum in a way that resonates with young audiences. Launched in 2023, Coke Studio in Nigeria has become a multiyear music platform, designed to connect with Nigerian Gen Z consumers through co-created culturally relevant content. We signed 3 local artists with global following, 18 million Instagram followers. We reached 10 million consumers through live experiences and delivered significant transactional value through value-added promotion on bottles of Coke, giving consumers the opportunity to win prizes. In 2024, together with the Coca-Cola Company, this strategy helped us add over 1 million weekly plus consumers, drive further market share gains in sparkling, deliver best-in-class engagement and be awarded the #1 Coke Studio market across the Coca-Cola system. It is a great example of how we contribute to the evolution and global reach of local culture while driving value for our business. Now when it comes to energy and Predator in particular, we're seeing phenomenal momentum. Since launching the brand in 2020, we've delivered a 150% volume CAGR, which is a standout growth story. The secret, it's all about locally relevant marketing that really resonates with Nigerian consumers. And nothing connects in Nigeria quite like football does. A great example is our Chelsea FC sponsorship. Nigeria has millions of passionate Chelsea fans. So this partnership instantly builds relevance and emotional connection for the Predator brand. At the same time, we're also deeply invested in grassroots engagements. We partnered with the World Freestyle Football Association to launch national tournaments like the Predator Energy Nigerian Freestyle Football Championship. This allows us to build real consumer engagement in a market where brand experience is key. This is a great illustration of what Naya spoke about earlier, combining global brand power with local insight and execution to drive relevance, loyalty and sustained growth. Back to you, Goran.

So we've shown you how we are driving growth in our 24/7 portfolio and tapping into the many opportunities for growth in Nigeria. To really demonstrate how we do it, we have to talk about our bespoke capabilities. We recognize that emerging markets cover complexity, and Nigeria has absolutely faced significant challenges in the recent years. But for us, we view these as opportunities to win in the market and drive a stronger competitive position. Despite the high levels of inflation and currency devaluation over the past 3 years, we've delivered volume and share growth, along with improvements in customer NPS. Our ability to navigate this environment comes back to what Naya was describing about our winning formula for success in emerging markets, the powerful combination of local knowledge and talent while benefiting from CCH culture and group strengths. Our dedicated and unique sales and supply chain academies reflect our long-term commitment to developing talent and strengthening capabilities. Through these platforms, we are building a highly skilled workforce that drives growth, enhances efficiencies and sharpens our competitive edge. We are also intentional about building leadership capabilities through both global and local programs with the aim of strengthening our succession pipeline. We build a flexible and adaptable mindset, empowering our people to manage volatility proactively with a constant scenario planning. We can activate different parts quickly and effectively, depending on real-time conditions on the ground. Let me share with you a few examples on how we do this in Nigeria. We collaborate closely with the group treasury on proactive ForEx scenarios planning, ensuring we have multiple pricing scenarios ready to roll out as currency conditions evolve. We've shifted from monthly to weekly P&L simulations, giving us a sharper, more continuous view of performance and enabling faster decision-making. And we significantly increased price transparency with key suppliers, allowing us to manage input costs more effectively. And in terms of the current macro environment, we are beginning to see signs of the improvement, including easing inflation, greater ForEx stability and meaningful government reforms. I don't want to overstate this, but we are certainly more positive about the external environment than we have been for a few years. As we build talent and our culture, we also relentlessly evolve our other bespoke capabilities. You've heard Zoran and Naya discuss the importance of our bespoke capabilities when we discuss overall CCH strategy. For Nigeria, it is no different, and it's a key element of how we drive our competitive advantage and navigate volatility. These capabilities aren't generic. We purpose built them to win in a complex market like Nigeria. Each one makes a tangible difference for our customers, our teams and our performance. Starting with revenue growth management. As you know well, RGM allow us to improve revenue per case, focusing on three priorities: pricing, mix and promo optimization. In Nigeria to address the high levels of inflation and currency devaluation, we executed 16 pricing actions across 2023 and '24 combined. As highlighted earlier, our approach consistently balances affordability with premiumization, ensuring we protect volumes as well as revenue per unit case. A great example of this is the performance of the affordable returnable glass bottle portfolio, which was the key driver of our volume growth in 2024, for which we saw [ 90% ] growth. At the same time, last year, we accelerated premiumization, delivering 40% growth in Schweppes. Moving to route-to-market. In Nigeria, we operate in a highly fragmented retail landscape with nearly 1 million outlets, with 94% of those being traditional stores. To navigate this, we have 8 plants located across Nigeria, including in Maiduguri, making us the only player in the industry to have a significant presence in the Northeast of Nigeria. Our supply chain infrastructure supports our omnichannel approach, allowing us to cover 100% of the market. How do we do this? With our direct sales team, which is the largest in Nigeria, we visit the most important 280,000 outlets, driving high execution discipline and achieving leading customer satisfaction. We then serve the remaining outlet universe through our leading large network of wholesale and distribution partners. This allows us to serve our customers day in, day out, which is a key competitive advantage. In a digital-first market like Nigeria, having the right digital tools for our customers is important. Our WhatsApp chatbot is a great example of where we have responded to the local dynamics to build a tool specifically for customers in Nigeria. This tool uses daily for order taking showcasing how smart, simple tech can transform customer experience and drive sales execution. Let's show you the tool in a short video. [Presentation]

Finally, I'll touch on data insights and analytics. As Naya mentioned at the start, Nigeria was one of the pilot markets for DIA at Hellenic. Through DIA segmented execution, we provide suggested orders tailored to each outlet, enabling our sales teams to proactively recommend the most relevant product mix. We also apply segmentation to personalize in-store activations, ensuring we focus on the right levers for each customer. This level of personalization is essential in a market as diverse and dynamic as Nigeria. And Nigeria continues to lead the way when it comes to new initiatives, which is where Ignite Naija comes in. And I will hand back to Dayo to cover this in more detail.

Thanks, Goran. So what is Ignite Naija? As we've spoken about before, in collaboration with Coca-Cola Company, we are leveraging our data, insights and analytics capabilities to segment consumers and customers. Ignite Naija is a new initiative that was started by the system in Nigeria, where we link consumer and customer data, enabling end-to-end segmented execution to accelerate profitable growth. Zoran spoke about this at the Q1 results on how it is helping us activate our premium portfolio, but it's broader than this. For targeted cities in Nigeria, we now have custom-built segmentation, and we're able to categorize affluency per outlet per city. Lets play the video. [Presentation]

As you've seen from the video, this new approach is allowing us hyperpersonalized consumer communications by linking consumer and customer data sets to then drive execution in store. We're enhancing our existing sales force tools such as suggested orders and recommended activities to be included in the pilot, empowering our business developers to drive change. The initial results from pilot show that when compared to previous year performance for test versus control outlets, volume per outlet was 7 percentage points higher and NSR per unit case was 4 percentage points higher. It's a great ample of the many ways the Coca-Cola Company team and our team can drive recruitment together in Nigeria. It is also particularly exciting as this collaboration was the first of its kind within the Coca-Cola system, and we are confident in its potential to be scaled. Now we don't have you with us in Nigeria, but we would like to give you a bit of a flavor of our country. So please let's watch this video. [Video Presentation]

Hopefully that gave you a sense of the culture and execution and excellence and execution we strive for Nigeria. And so what's next? Rebuilding Nigeria is just the beginning, and we are confident we can continue to unlock future value. For the medium term, we aim to continue delivering double-digit organic revenue growth. We also expect margin recovery after a few challenging years and overall improvement from here. Let me take a bit of time to take you through the drivers of these ambitions. Unlocking per capita consumption across our whole portfolio remains a key lever. We'll continue to recruit consumers, building brand equity and recognition, especially in our big category bets of sparkling and energy. A great example is the upcoming launch of the Share a Coke campaign in Nigeria in Q4 this year, which we're very excited about. This version of the campaign will feature over 1,000 names, celebrating the rich diversity of our country. We'll also drive NSR per unit case through premiumization and improving category mix, also exploring the launch of new categories, such as coffee, which we are trialing as of last month, and snacks. We will continue to win in the market by expanding our route-to-market to reach more consumers more effectively. In 2024, we added 55,000 more retail outlets that we directly cover, and there is more to go for. We also continue to step up our sophisticated segmentation approach and sales capabilities. And as a system, we will continue to invest. We've committed to invest a further EUR 1 billion over the next 5 years, we'll focus on expanding our manufacturing footprint. By the end of the year, three new production lines will go live. And we will continue to build and cultivate talent to maintain our edge because our people are the foundation of our success. I just mentioned the investment with the Coca-Cola system and its critical we play a leading group in investing in sustainability in the country, too. In January this year, we launched the first ever Coca-Cola system owned and operated state-of-the-art plastic packaging collection facility in Nigeria. This investment is a major step forward in our commitment to reducing waste. It supports a circular economy by enabling PET collection, processing clean PET bales with the ability to process up to 13,000 plus of plastic bottles per year and ultimately, fostering rPET production through partnerships. Through these efforts, we aim to reduce our reliance on higher-priced virgin PET. By investing in hub, we are also supporting local communities and creating jobs. Sustainability is a key priority for CCH. And while Nigeria is a different market to our others, sustainability is no less important as a growth enabler for us. I'll now hand back to Naya for some closing remarks before we go into Q&A.

Thank you, Goran. To close, we hope today's presentation has made one thing clear. We don't just operate in Nigeria, we lead. We built a model that not only works but wins, wins in one of the most dynamic and attractive markets in the world. Through our mindset, our people and our purpose-built capabilities, we turn complexity into performance. And we're just getting started. With continued investment in our culture, capabilities and partnerships, we are confident in our ability to unlock even greater value in Nigeria. Thank you for your time and interest. And with that, let me hand back over to Jemima.

Thank you very much, Naya, Goran and Dayo; for the presentation. We will now start the Q&A session. [Operator Instructions] And I'll also remind you that we are in close period ahead of H1 results, so please consider that when you're thinking of your questions. While we are assembling the queue of live questions, let me take the first written question from the platform, and then I'll hand over to the operator to take live questions. And it is a question for Goran. So on pricing in Nigeria, can you explain a bit more how you navigated the last few years and still gained market share? Can you talk a bit about how you approach pricing is in the next 5 years? And if inflation came down, would you roll back your pricing?

Yes. Thank you for the question. Absolutely happy to confirm that -- I mean we navigated quite a complex currency and inflationary context in Nigeria in the year in the last few years, but also happy to confirm that in that period, we have been able to grow our shares. And we did that by leveraging on our dynamic and agile RGM framework to drive the pricing. Now the framework has several principles, and I can cover some of them here. The overall principle is that we are aiming to cover 100% of the input cost or the COGS inflation that we are seeing in the business, which also includes any impact that can come from the currency devaluation as well. We do that by constantly working with the group treasury team and the local treasury team, having multiple ForEx scenarios, ready to adopt different pricing plans, depending on the context on the ground. When we develop the pricing plans, we have a very clear structure of the pricing that we keep, we stick to. For example, making sure that our returnable glass bottle always remains the most affordable choice for the consumers. And then once when we go into the pricing implementation, it is staggered or phased, so that we don't take the prices -- price increases on different packs at the same time. We rather do it in the phase, enabling consumers, for example, to switch from PET to RGB if they want. Finally, we are always making sure that for the post-pricing periods, to ensure that we have a consistent and strong sellout trend, utilize promotions in a strategic way to drive the sellout with our consumers. I think one last element I wanted to add is the fact that we have the advantage of having a large sales team in the country that are visiting our customers on a weekly basis. And this was a competitive advantage, I would say, because we had this opportunity to take our customers through and explain each of the pricing moves that we have been doing. And it absolutely helped because if you even look at our customer satisfaction or NPS score, it grew in the same period, which was quite encouraging for us. So I hope that covered your question.

Great. I can hand over to the operator now. We've got a few questions coming in.

We'll take our first question from Charlie Higgs of Rothschild & Co Redburn.

I was curious if you could talk a little bit about how the consumer environment has trended over the last few years and how you've adapted to expand weekly plus consumers by 1 million. Have you pivoted more toward affordability? Or has it been more of a case of getting your products in front of consumers with the help of the Coke system? And then I have a follow-up, please.

Okay. I can start. So first, I mean, we definitely want to acknowledge that the consumer environment in Nigeria remains challenging. I mean the fact is that the inflation has been growing ahead of the disposable incomes in the last few years. Now said that, we have been able in Q1 to grow our volumes low single digits, but faster than the industry performance. And we believe that we are excellent -- I mean, that we are a great position to do that, also because of our strong affordable offers, in our specific case, the RGBs. And so that absolutely helped us to drive the performance in the environment when the consumer environment remains challenging. But at the same time, we are driving the premiumization, as mentioned before. And the examples we shared were the examples of the Adult Sparkling with Schweppes, but also with the cans as a different or more premium pack type and ultimately with the Premium Spirits portfolio. Now said that about the affordability and the consumer sentiment, I think I also would like to share that we are driving the recruitment at the same time. We believe that we have at least two fantastic passion points that we are exploring. One that was mentioned in the presentation, is music, where we talked about Coke Studio that helped us recruit -- acquire a record number of the people or consumers in that period. But also looking forward, we are extremely excited to recognize that in Q4, which is a key trading season in Nigeria, we are bringing Share a Coke, which is another great example or a great campaign that we believe is going to help us to further recruit more consumers. And then finally, maybe one example that is outside of the sparkling category, which we also presented today, which is football and the example of the Predator energy brand that we have, where we are leveraging on a global partnership, but also activating at a local level, at a grassroot level, as we like to call it. So I think my point is, from a portfolio perspective, with our affordable choices, we believe that we are perfectly positioned to respond to the current consumer sentiment in the country. But at the same time, we do believe that we have a great assets, the passion points to continue recruiting the new consumers.

Great. And the follow-up was just on margins in Nigeria, where you spoke about wanting to improve for over time. Can you maybe share some color, what are the key drivers of that? And with regards to transactional FX, how much of the cost base is in U.S. dollars and how that's trended over the past 5 years with all the currency devaluation?

Yes. I think one thing we can say is that in 2024, we have seen a recovery of the margins, including the absolute EBIT. Our expectation is that, that recovery continues in 2025. Now, in specific case, we are absolutely focused on driving our top line. We believe that there is both volume, but also other elements of the NSR mix opportunity in Nigeria. I would like to remind that in Nigeria, our pack mix is approximately 95% immediate consumption. And because of that, we are very much focused on the elements of mix that are category mix. And I think we mentioned today energy category and Adult Sparkling, but also channel mix, where we are seeing quite the emerging modern trade, specifically premium HoReCa that is also bringing better margins. So we are absolutely focused on driving the NSR per unit case and continue to driving our volume as a key element of our revenue growth. But at the same time, we are absolutely using and we are going to manage any opportunity on the cost side. I would like to also use the opportunity to say that our OpEx as a percent of the NSR is at a best-in-class level within the Coca-Cola [ clinic ]. But as I said, we are still going to continue exploring any opportunity to further improve our cost management. But the absolute priority is on growing the top line.

Our next live question come Aron Adamski of Goldman Sachs.

I have two questions. First is on the recent 60, 70 liter packaging [ upsize ] in Nigeria that I think you launched. Can you please give us some color on what consumer insights have prompted you to launch this format and also, if you expect this to become a permanent feature of your package architecture in the country? And it would also be great to hear what has been the feedback from customers on this launch. And the second question is on returnable glass bottles, which have been mentioned a few times, and they have been growing very strongly. Can you give us some color on how the economics of a returnable glass bottle versus a PET bottle are different for you in Nigeria?

So let me start. Yes. So if I go back to what I said a few minutes ago is that our Q1 performance was ahead of the industry growth. So we saw the opportunity to further trigger or accelerate the industry growth by offering more value to the consumers. And that's exactly what we did at the end of the Q1. We launched or upsized from 50 to 60 CL PET in some of the regions in Nigeria, while at the same time, some of our competitors already did that or they are doing that as we speak. And we did that because we understood that the consumer sentiment is still impacted by the fact that the overall inflation has been growing ahead of the disposable income. Now we are obviously going to stay agile and open and flexible in our decisions of going back to the 50 CL or remaining in the 60 CL, depending on the future industry performance, which we are optimistic about. And we do -- as I said, we do expect to stay open for a change in the pack size. Now moving to the second part of the question that was about the RGB, I'm happy to confirm that together as the overall profitability in 2024, our RGB profitability improved, and we have the same expectations for 2025. I would like to point out here that from the foreign exchange exposure, RGB is also one of the levers because it has a lower foreign exchange exposure comparing to some other pack types that we do have that is also ultimately helping the profitability of the pack. So I think the key point is that it is an affordable choice for the consumer, but at the same time, it is profitable and improving on profitability pack type for us.

Our next live question comes from Sanjeet Aujla of UBS.

My first question is just really coming back to the level of profitability in Nigeria. I appreciate it's been a challenging couple of years, but what's the sustainable medium-term margin level for this sort of business where your first priority is really to prioritize top line growth? Is it too demanding to see Nigeria ever reaching group-level margins? Is that realistic whilst you're trying to divest a period growth? That's my first question.

As already, I mean, discussed, we've seen quite a number of currency headwinds in Nigeria in the last few years, and that created some near-term pressure on our profitability. I think the outcome of that is that today, our EBIT margin in Nigeria is below our group average. But at the same time, probably repeating myself, we have seen improvements in the margin and the absolute EBIT in 2024, and we expect to continue improving in 2025 and beyond. Again, our biggest opportunity really is to drive this through the top line more than the cost side, but not excluding the cost side. So absolute focus is on growing volumes and improving the quality of our NSR per unit case, where we really do have the opportunities on category mix, on channel mix. And always, I must say, in a country like Nigeria, price is going to remain the important part of the NSR per unit case equation. So I think the best I can answer is that we are expecting a consistent improvement of our profitability in Nigeria with absolute focus on the quality of the mix.

Understood. And my follow-up question is just going back to revenue per case, clearly, a lot of pricing has been taken the last few years. From here on in, should we think about revenue per case growing ahead of inflation with pricing in line with inflation and all of the mix benefits you spoke about category, et cetera, kind of been incremental to pricing in line with inflation? Is that the right thing about it?

Yes. I mean so far, where the currency devaluation was even ahead of the inflation, our approach was to always cover for the input cost or COGS inflation. Now given the fact that we are seeing more of a stability, especially in the ForEx context in the country, I think it is fair to assume that we are going to have less frequent price actions in the near-term future. And in terms of the driving principles for us, what we are really aiming for is to strike the balance between volume, mix and pricing when it comes to our NSR per unit case progress in the future. But at the same time, we are staying extremely agile and looking at the macroeconomic indicators in order to trigger any other part that I mentioned that we always have ready because we are working in a scenario mode, and we always have a multiple pricing scenarios ready, depending on different items.

Our next question comes from Fintan Ryan of Goodbody.

First question for me, please. I appreciate that Nigeria is huge market geographically and in terms of population. Could you give us a sense of how your market share does vary across the various regions, like particularly urban versus rural consumers? And when you think about the volume growth opportunity, is it more about getting existing consumers? Do you see more incremental upside from getting existing consumers to consume more of your products or expanding sort of the overall consumption base?

Thank you for the question. First, I think, Nigeria is quite a sizable country, and we do have a different share dynamics in different parts of the country. One of the areas where we see the opportunity to improve our share performance is in the Greater Lagos area, where we see quite a competitive landscape. But we also see the opportunities to improve the share not necessarily only in different geographies, but also in different category segments like, for example, [indiscernible]. But at the same time, where I see as the biggest opportunity for us to drive the share are, for example, our affordable options, the RGB that we mentioned because we are investing in the further returnable glass bottle capacity. And at the same time, there is a strong consumer demand for the returnable glass bottle. Given the fact that we still have the opportunity to position RGB to the level of the distribution of our PET that is close to 100%, we absolutely believe that this is one of the key opportunities for us to continue driving share. I do believe that we do have an opportunity to drive share both by the further recruitment, but also by improving the -- our sellout or the frequency of the sellout with the current consumers. So I think the opportunity is really -- it is really across, and it goes both in the rural and in the urban areas. I think the fact that we have quite a large and developed market and the supply chain footprint helps us to really accelerate outside of the urban because as mentioned before, we have the 8 plants that are perfectly positioned with a very large route to market, reach any outlet or any customer in Nigeria. So the opportunities are quite across.

And if I can just add on what Goran just said, the program that we shared earlier, the Ignite Naija that we're doing together with the Coca-Cola Company, is actually showing the beauty about going segmented and in that way, are surfacing macro opportunities when it comes to that to go and crack what Goran just mentioned. So we do see that this enhanced and sophisticated customer, but most importantly, consumer segmentation; translates into specific opportunities in different types of areas in Nigeria.

And just a follow-up. The Coca-Cola company owns -- has control of a stand-alone juice business within the Nigerian market or it has for several years. Is there any talks about integrating that more fully with the Coca-Cola Hellenic distribution?

No. The answer is, no.

Our next question comes from Richard Withagen of Kepler Cheuvreux.

First question is back on packaging. Apart from RGBs, you mentioned obviously that a lot, but what kind of packaging is a key focus in your RGM strategy to drive both growth and profitability?

We are well positioned across RGB, PET and can, and each one of them has a role to play. As mentioned, RGB is a great affordable choice. While at the same time, PET is the product that is distributed at almost 100% distribution across the country. And it is, at the moment, the biggest part of our overall sales. At the same time, the same -- as for RGB, we have seen the improvement in our profitability in 2024 on that pack, and we have the same expectations for 2025. So it is an important part of our RGM framework. And then finally, the can that has the highest NSR per case, is from the pack mix perspective, absolutely the opportunity because, as mentioned, we are already 95% immediate consumption country, but the can itself comparing to the other [ IC ] packs has a higher NSR per unit case and is helping us drive the NSR per unit case mix. So each one of them has a role to play.

That's clear. And then maybe one for Naya. Nigeria aims to be an example, I think, for other countries in terms of segmentation, RGM, et cetera. And can you confirm that? And how do you make sure that the learnings are shared across the group? Any specific countries that come to mind that could benefit from how Nigeria is operating?

Yes, indeed. As we said, many things start from Nigeria, and we're very proud to see how then anyone could lift and shift certain practices there. Then it gets the way we are sharing that across our markets is literally via best practice overall sessions that we're having, number one. Number two, we're getting a lot of the learnings and insights, and we are incorporating them in the academies. Number three, the way we are tracking overall -- each of our bespoke capabilities is surfacing also the specific examples and case studies that are happening. So it's an always-on interaction and sharing across our markets to make sure that whatever happens and we see success in Nigeria, it goes into different types of markets. And that's the beauty, I think, about our bespoke capabilities while the frameworks and the blueprints are the same across. Then from the different examples in the countries, we see what is working and what is not working. And then we allow the markets who are fully empowered to bring them to life in their own specific locally relevant way.

Our next question comes from Robert Ottenstein of Evercore ISI.

First, a big-picture question. I think you mentioned that per cap consumption in Nigeria was below the Africa average by about 10. Is that a function of the weight of South Africa? And how do you think about where the per cap consumption in Nigeria makes sense? Where do you benchmark it? So that's the first question. And then the second question on the energy side, I think you mentioned that energy is now 12% of sales. Can you talk about what percentage of operating profit it is and what part of the overall value chain for Monster that you capture?

So on the per cap point, I will start. So we believe the per capita consumption opportunity in Nigeria is evident. I mean, we mentioned the opportunity versus the average of Africa, but also we can recognize the fact that comparing to the other 28 Coca-Cola Hellenic markets, there is quite an opportunity. So we believe that what we are doing with recruiting consumers in a meaningful way by building the brands, especially behind the sparkling and energy, with the program that we presented some of them today is the way to go to continue driving the per capita consumption. And again, just to remind, in Q4 this year, we are launching Share a Coke campaign, which we are extremely excited about because we are going to have more than 1,000 names in Nigeria, which is the highest number of any market in the world, we believe. And together with other passion points, we believe that this is going to help us further accelerate the per capita. Speaking about the energy, energy is extremely attractive category at the moment in Nigeria. And our performance within the energy has been extremely strong. We believe that that's the outcome of the fact that we first have a fantastic portfolio where we are perfectly positioned in both premium, with the Monster as a premium proposition, but also with the Predator as an accessible high-quality proposition. And at the same time, we have a fantastic passion points that we are -- that we presented one of them today with the football, that is helping us to recruit more energy consumers, and we plan to continue recruiting more consumers in the energy. Now said that, it is also fair to recognize that per capita consumption of energy drinks in Nigeria is also very low, even comparing to the SSDs and definitely comparing to the energy drinks per capita in our other markets. So despite the fact that it is one of our growth drivers, we still see quite an opportunity also to accelerate the energy. Now on the final part of the question, what I can say is that, first, yes, it is currently contributing 12% of our share in the revenues. We are quite optimistic that with the current rates, it will even increase, especially having in mind that we have a bold vision or long-term aspiration to become the leading player in the energy. So we do believe that a mix of contribution in our revenues from the energy even increases.

Our next question comes from Sanjeet Aujla of UBS.

I just had a couple of quick follow-up questions. You outlined a lot of investment going into the market. Can you just give us a sense of what sort of CapEx is required in Nigeria to deliver the growth aspirations? And can we think about the business being free cash flow positive for Hellenic? Or is it really a high investment market supported by the free cash flow generated elsewhere in the group?

So first, I can say that, yes, Nigeria is the investment market at the moment. We do believe that we are in a good growth and a good investment in a good investment phase. As an outcome of that, our return on investment capital in Nigeria is of the group levels because we are investing ahead of the curve. So ultimately, we know there is a balance to strike as we don't want to reduce the investment and see the return on the investment capital improving and then have to step up the investment to fuel further growth in the future. We believe that this may be more expensive and harder to catch up. Today, the Nigerian ForEx market is functioning well. And there is also an improvement in ForEx liquidity, which allows us to source the hard currency. And in case we would need to repatriate cash, we will be able to do so. But as mentioned, since Nigeria is in a good growth and it's in an investment phase, the cash in the country funds the operational and the CapEx investment needs of the business. And for that reason, there is no need to expatriate the cash out of the country.

And just a quick follow-up, please, on RGB. So a lot of discussion around this today. You spoke quite a bit about further investments in this pack format being a competitive advantage. Can you give us a sense of what sort of distribution you have in RGBs today relative to PET? And what the plans are with the investments that you put in to be in the next 3 to 5 years?

So RGB is currently the fastest-growing part of our business. And there is still a large opportunity, as mentioned before. We do have the opportunity to probably increase our distribution for approximately 20 to 25, I would say, percentage points comparing to the PET, which is the outcome of us continuing to invest further in the capacity of the RGB. That also includes the glass bottles and the manufacturing lines. So I'm not sure that I got the question in full.

Yes. I think like we are increasing overall the capacity in RGBs. It always starts with like making sure that we are meeting demand and expand overall our outlet coverage, so when it comes to that, and all this is part of overall the way we are thinking about the markets and in particular case of Nigeria, the way we build our longer plans together with the Coca-Cola Company.

Got it. And just my final one. Just on the absolute price point of RGB versus PET, can you give us a sense of the price differential at the consumer level?

Yes. I mean our RGB at the moment is 2 price points below our core PET pack.

There are no further questions on the webinar. I will now hand over to Jemima to address the written questions. Please go ahead.

I'm conscious of time. So I'll just -- a couple of the questions have already been answered, I think, in other answers. So just a couple left. So the first one is, so 10 years or so ago, sparking competed more directly with beer for what was quite a small consumer wallet. But given the level of development of the economy today, to what extent now does sparking still compete directly with beer?

My view is that -- I mean, first, both categories independently have quite an opportunity to grow. So we are very much focused on growing our category by recruiting more consumers and driving behind the benefits of our bespoke capabilities that we already suggested today. So at the same time, I mean, yes, we can acknowledge also there are some meaningful reforms coming from the government that are helping potentially increase the consumer disposable income in the future. I think some of them we mentioned. Like the increase of the minimum wage for the consumers, that is definitely going to help drive both beer and any RTD industry performance. So I do believe that for us at the moment, not necessarily competing for the beer consumers, we have quite an opportunity to keep growing our volumes and our shares.

And the next question is around -- just another one on energy. So can you talk a little bit more about the demographics of the energy consumers in Nigeria, whether that's male or female, age? How different is it versus sparkling? How much kind of overlap is there in the consumers of energy and sparkling?

Yes. I mean I can try. I believe that one of the key elements that comes out strong in Nigeria is the need for the functional benefit because a lot of Nigerians and consumers are quite in a move almost 24/7. We call it a hustling lifestyle. So that's what makes energy offerings quite unique in Nigeria. At the same time, energy has a different price positioning comparing to our core sparkling portfolio. And I don't believe that that's necessarily competing at least at that price level. As I said before, I do believe that both categories independently have quite an opportunity to grow because we discussed the per capita opportunity for both categories and that is quite sizable. So opportunity across.

And overall, for the energy, the industry trends are so attractive, and there is so much increased consumer demand for this category, so it keeps growing and expanding. So there are -- like it is evolving when it comes to consumer taste, and so there are like opportunities. And the way we are playing in both categories, energy and SSDs is allowing actually by the occasions and all the segmented approach that we're using to leverage and grow both.

Fantastic. Well, that was the last question on the webcast, and we're out of time really. So I would just say thank you very much for joining the presentation today. We hope it's given you greater insights into our Nigerian business and look forward to speaking to you again soon, and I'll hand back to the operator to close the call.

Thank you for joining today's call. We are no longer live. Have a nice day.