Keurig Dr Pepper Inc. (KDP) Earnings Call Transcript & Summary

Yes. Okay. So if everyone can find their seats, we're going to get started. So we have Keurig Dr Pepper with us next, and we have the company's CEO, Tim Cofer. It's nice to meet you for the first time in person. And the company's CFO and President of International, Sudhanshu Priyadarshi. So great. Thank you so much for being here again this year. Plenty to do. So we're going to sort of jump right in.

Let's do it.

Okay. Let's do it.

So throughout the summer, the market became more concerned about the possibility of a hard landing from a macroeconomic standpoint. Second quarter earnings season definitely felt like it featured more regular mentions of a more challenged consumer, and that's something we've been listening for a day, a quarter in, if you will, here. So just curious to start with, what you're seeing across your categories? And what are your second half plans assume in terms of the consumer backdrop, particularly in the U.S., but if you want to weigh in international, too?

Sure. First of all, it's great to be back at Barclays Global Consumer Staples Conference. So thanks for the invite. I do think it's fair to say we're seeing a bifurcated consumer environment. And obviously, we spent a lot of time as any great CPG company would do in analyzing the consumer. And what you see is a little bit of a tale of 2 cities. You're seeing a low and mid-income consumer that's feeling stretched, that's seeking value. And you see that manifest in how they shop, when they shop, where they shop, things like preference and some growth trends in certain channels, think club, think dollar, et cetera, a little less on C-store and instant consumption, favoring retailers that are really promoting value. You're seeing also in maybe wading a little bit more to stock up on a multipack deal around a holiday ad, for example. On the other side, you're seeing a premium consumer kind of that top [ quartile ] that remains very resilient and is interested in seeking out premium experiences and premium brands. And so for us, I think, as we put together this plan, we largely anticipated this environment. I think, to your point, it's fair to say it's been accentuated a little bit in the second quarter and of late. But I think we have the right plans in place, starting with, we've got a strong innovation slate, brand activation slate. You're seeing that in things like Dr Pepper Creamy Coconut this year, you're seeing it in Canada Dry Fruit Splash and all-new refreshers line in our coffee business. So we feel good about our innovation and activation slate. Value is something that we are definitely working against everything from relooking at our price pack architecture and making adjustments, coffee would be a great example of that, opening price point brewers, emphasizing the amazing value still on our CSD business, which offers great value in liquid refreshment beverage. And then finally, on the premium side, we're driving some great successes in premium, whether that's our higher dollar per ounce liquid refreshment beverages, like energy and sports hydration, or whether that's things like super premium brands on coffee, think Lavazza, think La Colombe. So overall, we feel good about the strategies and tactics we're pursuing. You've seen our front half in 2024 accelerate over the Q4 momentum that we exited last year. And I anticipate a further acceleration in the top line in the back half of this year relative to the front half based on things largely within our control, those partnerships, that innovation slate as well. And that all, I think, builds the confidence that Sudhanshu and I have to continue to deliver on that MSD top line commitment and high single-digit EPS commitment on the year.

Okay. Great. And Tim, as CEO, you've emphasized the importance of putting the consumer at the center of decision-making for the company. Can you just elaborate a bit on what that means in practice? How it should manifest in financial results? And where is the greatest opportunity to sharpen the focus? And does that mean stepped-up reinvestments?

Yes. As you know, and you joined us, we had an Investor Day in March and a chance to really recalibrate the next chapter of value creation at Keurig Dr Pepper after an amazing first 5 to 6 years since merger. And as part of that strategy, we outlined kind of 5 key pillars. The first, as you said, is all around championing consumer-obsessed brand building. I've had the fortune of spending over 3 decades in CPG. And you see time and time again that success is underpinned by that strong consumer orientation. And that's what we do here at Keurig Dr Pepper. And if anything kind of reemphasizing that in today's challenged macro environment. And I think it starts with really putting the consumer at the center. And for me, one of the preeminent consumer frameworks that I've used a few times in my career that we deploy here at KDP is a simple but powerful framework called demand spaces, really mapping consumer behavior, consumption behavior from dawn to dusk, whether you're at-home or away from home, whether you're alone or with others, and those intersections create these demand spaces that generate rich insights, consumer-driven around answering the questions who, what, when, where, why, how? And based on that, a lot of great things happen. You can position your portfolio for the most incrementality, that suite of brands. We have 125 owned license and partner brands. So how do you maximize the incrementality? Really sharpen the messaging and the positioning and the advertising around our brands. It opens up innovation opportunities based on that consumer understanding. And again, here, I think the proof is in the pudding. Look at what we put up this year. Great new marketing campaigns around Dr Pepper brand. The innovation I mentioned earlier, Canada Dry Fruit Splash, Creamy Coconut, et cetera, Coffee Refreshers. In addition, I think that consumer orientation helps in areas like M&A in terms of understanding where the white space is, how does our current organic portfolio address that, and where are opportunities to build out that portfolio. The other thing that's often, I think, underappreciated in terms of consumer orientation, we generally think of it as a growth lever, and indeed it is, but it also can help with the cost agenda. And Sudhanshu and I are pursuing a fuel for growth agenda, and it can also unlock opportunities around productivity, think design to value, what does the consumer truly value in this brand, in this liquid, double down in those areas and cut costs where it really doesn't matter. So I think that consumer orientation is our North Star, one we feel very good about and one that you'll see continue to manifest in both the top line and the bottom line.

Okay. I want to keep going on productivity on that point. I know you talked about design to value. But you can argue that in today's environment, productivity is even more important for the industry to protect margins and keep funding reinvestment. There's going to be presumably a lot less availability of pricing than we've seen in the last few years. So you've highlighted productivity is the core component of this evolved strategic framework. I was curious if you could talk a bit about how your approach to generating fuel for growth is changing. Again, I know you just mentioned the design for value, but there's more to this and where you see the most meaningful opportunities across the business?

So Lauren, productivity is a focus area for us. But we see productivity is one component. We look at overall cost efficiency is a bigger picture. Productivity is one component of it. If you look at -- since we became a public company 6 years ago, we have seen 3 chapters. Our first chapter was when we brought these 2 businesses together, that generated close to $600 million of synergy. The second chapter was pandemic, where we prioritized customer service over productivity and cost efficiency. But during that time, we also seeded 3 state-of-the-art manufacturing plant investments. And then the third chapter is now, where pandemic has ended and where we're seeing more productivity and more cost-out agenda. And that's what we have been driving. You have seen we are also having more flexibility in network optimization because of the investment we made 3, 4 years ago about state-of-the-art manufacturing. You've seen us shut down 2 legacy coffee plant as Spartanburg is ramping up. So that will continue to give us benefit in going forward. And our target is gross productivity 3% to 4% per year. But as I said before, we look at overall cost structure. And the other thing we focus on is SG&A. We laid out target that SG&A and overhead will grow at or below the rate of sales. And there are 3 components of that, that will drive this cost-out agenda in SG&A. One is BU-centric model. We focus on BU first. Second is lean corporate center. We have fit out cost strategy and make sure that the corporate cost remains less, and it's a lean corporate center. And the third is indirect cost management. So we feel that all productivity, the flexibility in network optimization as the manufacturing -- state-of-the-art manufacturing was ramping up and this SG&A agenda will give us enough fuel for growth that we can continue to reinvest in the brand and expand margin going forward.

Right. Great. Let's talk maybe about the segments. So switch to revenue growth a bit. So in the U.S. Refreshment Beverages business, Dr Peppers had stand out momentum now on share gains for a number of years. And this press recently highlighted the brand reaching the #2 position among full-flavor CSDs. So what are the opportunities to meaningfully grow the brand from here? How do you keep this going?

Yes. I think our U.S. Refreshment Beverages business has had a great track record of growth over the last few years since merger, really growing at the high end of that overall guidance of mid-single digits, consistently in the mid- to high single digits. And it does start with our icon and Dr Pepper, no doubt. I mean talking about Dr Pepper, you step back, it's a $5 billion retail brand. And it's a brand that now is the #2, as you mentioned, #1 flavored CSD by volume. It's a business that we think this year will experience its eighth consecutive year of market share growth, as you said. And it's a brand that our fans absolutely love. In fact, Ad Age just recently, I think it was last month, named Dr Pepper one of the hottest brands of 2024. And yet, next year, we'll hit our 140th year since the founding of Dr Pepper. So this is the oldest major soda in the U.S. and yet a brand very much young at heart and one that's very dynamic. Our teams do a great job with Dr Pepper. You think about the marketing of the brand. We launched a new campaign this year that's a lot of fun around. It's a pepper thing, back to the demand spaces, connecting with friends. It's a great campaign. Any college football fans out there know that we're huge in the college football. We just launched last week our seventh season of Fansville. And that continues to surprise and delight college football fans. The track record of innovation, I think, is impressive on Dr Pepper. Last year Strawberries & Cream was a $300 million success at retail, #1 CSD new innovation in the entire country. And then this year, we followed it up with Creamy Coconut. Creamy Coconut is our most successful LTO, limited-time offering, get it while you can because at the end of summer, we're going to shut that down, but that has been an amazing success, really capitalizing again, back to your question on consumer orientation on the whole dirty soda trend with that creamy coconut flavor. So the track record is there. And yet, to your point, Lauren, I'm really bullish on the continued growth potential of Dr Pepper. I'd point 3 things. Number one is, we still have distribution opportunities to grow this brand. Certain sizes, flavors in certain geographies, believe it or not, we have the right, given the velocity and the track record, to be further distributed. Number two for me is Zero. If you haven't tried Dr Pepper Zero, it's across the hall here at the Barclays Conference. This is an amazing beverage, highly incremental to base pepper and Diet Dr Pepper, and attracting more young and multicultural. We've got a lot of head space of growth still on Dr Pepper Zero. And then continued innovation. We've got an exciting new variant coming next year. I won't announce it tonight, but you'll see it showing up in '25. And so I think we've got a lot of runway still on Dr Pepper. And by the way, I know the question was on pepper, but then you think about the rest of [ ref bev ] portfolio. Canada Dry, great success there, $1 billion brand. Think about brands like 7UP. We completely reskinned and relaunched that brand in lemon lime. We've got some innovation next year. Brands like Mott's. So we've got a lot of runway still in U.S. Refreshment Beverage definitely underpinned by flagship Dr Pepper.

Okay. Great. And I felt like there was actually a pretty candid discussion in last quarter's call on the work still to be done on stills in the portfolio. And that was very appreciated, the transparency industry saying, here's where we are. So you've got the [ Bai restage ], you had core programming around the Olympics, Mott's, back-to-school season. But if we take a step back and think about maybe the bigger picture behind some of these brands, are there structural factors that make competing in these categories or with these brands different than what you experienced in CSDs? Are they getting the support they need, given, I guess, the first call on resources is always going to be Pepper?

Right. Yes. Well, stepping back first, I'd say, since merger, the last 5 years, we've experienced good growth on our stills portfolio and consistently driving kind of that mid-single-digit growth trajectory. It's fair to say, of late, at a category level stills is under pressure as a collection of beverages. And I really think that is macro driven. It is a function of what you're seeing overall back to your first question on the consumer dynamic and the macro backdrop. When you think about it, stills skew more to instant consumption and to single bottle relative to some other categories. And so when you're seeing pressure at things like C-store and instant consumption, it kind of connects that stills under pressure. So a lot of this is a broader kind of macro backdrop. Within that, and you cited a few of them, I'd point to very quickly 4 of our biggest still businesses and how we're feeling about it. I'll start with Bai, as you mentioned, completely relaunched the Bai brand this year under the banner of WonderWater, reformulated, a clean label, great new flavors, powerful celebrity spokesperson and partnership and kind of colab with Sydney Sweeny, great activation in store. And we're seeing in the last quarter incremental household penetration, new users, improving velocity. And so it's early days, but we're encouraged on what we're seeing on Bai. Next place I'd go is CORE. And we placed a bet this year. The big bet was on the women's U.S. gymnastics team. Congratulations to them on the gold medal performance in Paris. And I think that's paid off at retail. Our retailers got behind it, had some great activation in store, some good price promotion activity. And we're seeing, in particular, younger and multicultural consumers coming into the CORE franchise. That's encouraging. The third is Mott's. And actually, of the Still portfolio, I'd say that one, I'm probably most excited about this year. Big bet on Mott's for back-to-school. Mott's, as you'd expect, mom-approved kid-loved brand. This is a $1 billion brand for us, Mott's, one of our purest, most unadulterated beverages. We contract with family farms in Upstate New York here. And we've got our facility there in New York and pick fresh apples, convert into apple juice and sauce in like 20 minutes. It is a great product, a fresh and natural product. And we've got an all-new campaign with [ Spokes Apples ] for Mott's. So look for the Spokes Apples. And a great activation in store. And where we've seen the early programming around back-to-school, we're seeing some significant share gains in sauce. So I'm encouraged about what you'll see on Mott's. And then I'd be remiss if I didn't talk about Snapple. And I think to the premise of your question, I expect more from our Snapple's franchise. We have work to do in Snapple. Snapple is another icon, almost $1 billion brand. Obviously, the heartland here in the Northeast for Snapple. We have more to do there. It's a construction site. We're working with our marketing team, our consumer insights team, and you will see some fresh programming, partnerships and some innovation coming in '25. But in aggregate, I'd say we like our still portfolio. There is macro pressure that's consistent with the industry, but we're controlling what we can control. I think 3 of the 4 big ones are on their way and one is yet to come.

Okay. Great. Talk a little bit about DSD, right? You have a unique DSD system. You've continued to invest in capabilities since the merger. And then you recently acquired Kalil, Arizona asset. So that builds on that. And it seems that you're exploring the possibility of taking back distribution in California. So I'd love to talk maybe how do you think about the relative merits of gaining further control of your distribution versus strategic partnerships with others?

Yes. Yes. I think to win in liquid refreshment beverage, DSD is an absolutely critical capability. And at Keurig Dr Pepper, we're very proud. We're one of three national non-alc, direct store delivery systems in the United States. We cover 80% of the U.S. population with our own DSD system. And where we don't cover, we work with great partners. For me, DSD is something I've had the privilege of running 2 DSD organizations in the past, and now here at KDP, it is truly a source of competitive advantage. And so where possible, where feasible, where it makes sense economically, I do favor controlling that last mile. I think it can be a source of competitive advantage. And one of the greatest kind of enablers of DSD excellence is scale. And it's one of these virtuous cycles where scale begets scale. You build scale as we've done at KDP over these last few years, both organically and through great new partnerships, think Electrolit, C4, et cetera. That allows you to have a larger drop size, particularly at places like small outlet, greater store frequency that improves your overall economics. You can then reinvest further into that DSD asset and that flywheel just starts to turn. So where it makes sense, we like to do that. And as you say, Lauren, Kalil is our latest example of that. We announced that in our last earnings call. Really pleased, early days, just closed that last month, so we're a few weeks into it. But opening up all new geography, Arizona was kind of white space for us. It's a great state, a large population, high-growth, multicultural, and now we've got KDP assets on the ground, 2 facilities, Tempe and Tucson, and we can service that entire state. So we feel very, very good about that. As I said earlier, in the places where we aren't present, we work with great partners. And certainly, we've got hundreds of contracts across the country with various partners, both big and small. And we value those partnerships. I've met with almost every one of our major bottling and distributor partners. That's a really important part of our ecosystem. And we'll continue to honor the agreements we have. But when opportunities come up, where we have the opportunity to look at the possibility of taking back the rights, we're going to look at that, and we're going to look at it through 2 lenses. One, what's best for the brand? Do we think that the brand can be enhanced, distribution, availability, et cetera, through our stewardship? And the other, obviously, is what's in the best interest of the shareholder? Will we get a good return if we make the investment like we did with Kalil?

I have the shift gears. I'm looking at the time.

Please.

I have a follow-up. So -- okay. Coffee. So you've been focused on turning around U.S. coffee revenue momentum this year. There, too, you've been very transparent about adjustments needing to be made. Can you just talk maybe about what's gone sort of as anticipated thus far? And maybe what hasn't? Are you pleased with progress, kind of key focus areas from here?

Yes. Stepping back, I joined KDP in late '23. And as Sudhanshu and I and the coffee team, we're putting together the plan for 2024, I think it's fair to say we anticipated an at-home coffee category that was still very much in recovery mode. And I think when we did the initial guide, we talked about a muted at-home coffee environment. And when you sit here today, September of '24, I think that expectation was appropriate. And I think it was prudent, and I think it's largely played out as we anticipated. At-home coffee is still on the recovery mode of kind of that post-pandemic normalization. And if anything, that overall affordability concern that we talked about in your first question, also plays into it. And so for us, we are focusing on controlling what we can control. And I'd point to 3 key levers: affordability, premium and cold. So on affordability, that is a big push. If you think about coffee. If you look at every major category in food and beverage in the grocery store, coffee is actually like a top $5 per unit category, right, because of its multiserve nature. So when you think about the inflationary environment post COVID, everything is up, call it, 20%. But for a higher dollar ring category, that hits the pocket book just a little bit more. So what are we doing about it? It's everything from price pack architecture. I think we've shared with you and others, we've down-counted our 12 count to a 10 count in K-Cups, our 100 count and Club to an 80 count, not changing the price per pod, but a lower dollar outlay. We're also pursuing value-priced brewers. And I think you asked this question on our last earnings call, we're also pursuing value messaging. It's out there now as of second quarter, seeing good ROI on that, very simple telegraphic, digital messaging that puts the quality and convenience of Keurig coffee in a broader frame of at-home coffee. Simple messages like for the price of your Monday coffee shop coffee, you can have Monday through Friday with Keurig. We're seeing -- you can imagine on the value-conscious consumer, low and mid income, pretty resonant messaging there. So that's value. On premium, we're seeing great traction. We announced the expanded relationship with Lavazza, meeting actually with our Lavazza partners tomorrow from Italy, who are making a trip over here. La Colombe, a fantastic brand with a great super premium offering. And then finally, Cold. At away-from-home coffee shops up to 70% of beverages are sold cold or iced, and yet at-home, that behavior is less than 20%. We have a huge opportunity as the preeminent pioneer and single-serve coffee to bring coffee at-home. This year is our largest push ever in the cold coffee. The new Keurig Brew and Chill, which is now available. Brew is a cold cup of coffee to the touch in 2 to 3 minutes. New iced and cold brews and refreshers. That's our big news this year. Under The Original Donut Shop, we've launched a line of refreshers that's double our expectations so far. So we feel very good about it. So I think controlling what you can control, I'd speak to -- while the at-home coffee category is still muted, as expected, I'd speak to 3 quick green shoots. Number one, pod volume momentum is sequentially improving. If you look at back half '23, front half '24, it stepped up, and we would expect to step up again in back half '24. So pod volume momentum sequentially [Audio Gap]. Second, our owned and licensed market share is also improving. On the back of that innovation slate, brand activation slate, PPA, price pack architecture moves I referenced. And the third is brewers. We're seeing growth in brewers, which is very good and obviously a leading indicator of what's yet to come. And we're seeing growth of the Keurig brewers in the overall universe of total coffee brewers. So encouraging green shoots on coffee.

Okay. Great. And just sticking with coffee, [ costs ] are now once again inflationary for coffee. So how are you thinking about balancing top line progress against protecting margins? And then maybe a little bit longer term, do you see potential for further expanding margins, particularly with the new disruptive innovation that's on the horizon?

So this is a great question. In the short term, obviously, we're seeing highly inflationary green coffee prices. And -- but we normally hedge for 6 to 9 months. So we have already factored that in our outlook for 2024. So the guidance, which Tim just reaffirmed this morning, has factored that in. In the long term, we are the steward of Keurig coffee. And for there, the goal is to create sustainable growth in our single serve. And the way you do it in a balanced top line and bottom line growth in the long term with an attractive margin that allows us to keep reinvesting money in the business. You have seen this green coffee was this high 3, 4 years ago. It comes -- goes up and down. We look at 4 factors that drive margin. One is obviously inflation, pricing, productivity. I talked about Spartanburg and how it's ramping up, that's allowing us to have a better cost per pod. And fourth is mix management, where you're launching accretive mix premium brands. So all of those factors still gives us the confidence that we will continue to expand margin in the long term, and that allows us to reinvest money in the system. Regarding the short term, we said it's already been factored in. And as I've said before on the call, in 2024 for the full year, we are expecting margin expansion versus 2023. Obviously, it was more first half based. But the full year, we will expand margin versus 2023.

Okay. Great. And I just wanted to focus on disruptive innovation, right? So you announced the next-generation Coffee System, the new consumable plastic-free K-Rounds, reverse compatible brewer, K-Alta. So why now? And how are you sizing the opportunity for that system and maybe key milestones between now and commercial launch?

Yes. Yes. At Keurig Dr Pepper, we talk about a challenger mindset is central to our culture. And when you think about what does it mean to be a challenger, it is about disruption. And that includes being willing to disrupt ourselves. And I think a great example of that is this new Keurig Alta Brewer and K-Rounds. And this has been a labor of love for the last many years in our R&D group at Keurig. And really addresses everything a consumer would want in their brewer, right? So this new brewer starts by providing all types of beverages, the traditional drip long black coffee, but also a high-pressure espresso, your lattes, your cappuccinos and cold coffee. So every form of coffee you'd like in 1 brewer. And on top of that, as you say, it does it in a pod that is completely plastic-free and completely aluminum-free. So we're really excited about this. More importantly, since we unveiled our intent on this, our retail partners are really excited. So we've met with -- as you imagine, all of our retail partners, they're excited to bring this to market with us. And the timing is really later this year that we're going to go into beta consumer test. We've actually got a number of investors and analysts, I think you might be one that have raised their hand and said, "hey, I'll be in the beta test", and we look forward to sharing that with many of you. And we really want to get this right, right? This is a disruptive technology. And we want to be sure that we learn in this beta test consumer preferences, consumer usage, consumer friction points. We also, since this is a new technology, like a lot of technology, there's going to be an adoption curve that we need to better understand. That's why, as you said in your question, we made it reverse compatible. So this brew both your traditional K-Cup and this new K-Rounds, plastic-free and aluminum-free. And so we want to understand what that migration arc looks like. We're excited to do that. I think as you think about the impact to our results, it's not going to be a material impact to 2025 because we're going to use this time to get it right. But really, after that, as you think '26 and beyond, it's going to show up, and I think it can show up in a big way.

Okay. Great. International. So you've characterized the International business as an underappreciated asset. We've certainly seen that in the results, of late. Could you maybe just shed some light on how you've been driving outsized growth in those international markets? Where do you focus the investments? And where do you see as the most promising expansion opportunities?

So International business has doubled since the time of the merger, which was roughly $1 billion business, then we merged Keurig and Dr Pepper, and now it's close to $2 billion business. It has high single-digit top line growth, and we believe it will remain an outsized growth driver in the future, too. Our algorithm is mid-single digit for the company, and we believe this International business will continue to drive high single-digit growth in the near future. Currently, we have 2 businesses, $2 billion businesses. One is in Mexico plus LAB and second is in Canada. Both these businesses have a solid foundation. We have attractive -- we have an attractive categories. We have leading brands. We have a strong route to market, multichannel out to market. In Mexico, we have a company-owned DSD. And third, we have a local team, experienced team that really knows the business very well. The growth, most of the growth is mostly driven by Mexico, and Mexico is like U.S., where we have company-owned DSD. And DSD is important in Mexico because there's a lot of traditional trade. So it has -- it's critical for driving that growth that allows us to reinvest in cooler, invest in adding more routes. And the second thing we have a great portfolio, we also do lift and shift from U.S. to Mexico. And the capabilities like RGM, price management, mix management, we use this from U.S. and in Mexico, and that's driving growth. And we have a lot of room to grow there also in terms of portfolio. So similar like U.S., we have this build by partner brands. We have Red Bull on our truck in Mexico. Canada is we have -- it's more like U.S., we have a preeminent coffee system, where we are driving growth, similar [ high base ] growth, installed base growth, household penetration, pod innovation, brewer innovation, also signing new partners. And in our CSD, we're driving similar like U.S. innovation that's driving our share. And we also have low alc and non-alc portfolio in Canada, that's growing faster than the LRP. So these are the businesses that gives us confidence, that this will remain an outside growth driver for KDP.

Okay. Great. In our last minute. I just -- sorry, free cash flow generation is accelerating. Balance sheet leverage is reasonable, gives you more optionality. So how are you thinking about investing for growth versus returning cash to shareholders? And is the preferred model for portfolio evolution still partnerships versus...

So we -- cash flow generation is strong hallmark of our business. We have generated a lot of cash flow during the last 5, 6 years. And if you look at it the way we have invested, it may be different by year, but overall, 50% of the investment went to internal business, M&A partnership and 50% went to returning money to the shareholder through dividend, through opportunistic share buybacks. So we are very happy with the way we have allocated our capital to date. Regarding M&A and partnership, that's -- so our #1 priority is internal investments that has the best payback. Number two is M&A and partnership. And lately, you have seen us doing more partnership with equity ownership, but we are not wedded to one model. It depends on, first, we want to be in the white space to continue to expand our portfolio. Then we decide what's the right model. Is it build by partner? And then it comes to what the valuation is? Are we better off taking majority control versus doing a minority control and adding distribution? Because this also gives you another profit pool. So it depends on the asset. It depends on what are the other attractive opportunity we have to invest in, whether -- when the stock price was down in the beginning of the year, we purchased more than $1 billion of market share -- of the share buyback. So we do all of that, look at different investments at a different time. But in the long run, we are not wedded to one partnership model, and it's more asset by asset.

Okay. Great. We are out of time. So please join me in thanking the KDP team for being here, and we're going to go to a breakout session after this.

Thanks a lot.