Mondelez International, Inc. (MDLZ) Earnings Call Transcript & Summary

Joining us today from Mondelez are Luca Zaramella, Executive Vice President and Chief Financial Officer; as well as Vince Gruber, Executive Vice President and President of Mondelez's European operations. So Luca and Vince, thank you each for joining us and looking forward to this. Before we begin, just a logistical point to those of you listening in. If you're joining via the conference portal, you should see the ability to submit questions in the window in front of you. Please feel free to make use of that at any time during the conversation, and I'll do my best to integrate your questions in as we go. So with that, Vince and Luca, thanks again for your time.

Luca, maybe we open with you and let's just talk about the overall health and positioning of Mondelez's business today. Exiting the first quarter, it seemed in a very good position, seemed very confident that you could deliver, if not over-deliver on fiscal '21 objectives. Can you just talk about that and talk about where you see the strength being sourced from?

Thank you for the question, and thank you for having us today. Yes, I believe the business fundamentals are solid, as solid as they have ever been, quite frankly. And all the cultural changes and the investments we have made in the last few years are actually underpinning this foundation and ensuring that for the years to come Mondelez has a bright future. Since the launch of the new strategy, we saw there was a page in the Q1 earnings that showed that we averaged 3.8% growth. As you said, we ended 2020 with very good momentum despite the numerous external challenges COVID-related, which proved once again the resilience of our categories and, importantly, the strength of the teams that we have around the world, strong execution was really the figures of 2020. And our teams around the world have done a great job. We started, as you said, 2021 very strongly despite lapping the fastest-growing quarter in 2020. And importantly, we see that our brands are quite strong. Consumers tend to favor our brands, and we continue, in fact, to see good market share performance, which is both an unprecedented in terms of the share we have been grabbing in 2020 and so far this year. By market, importantly, we see a significant improvement across emerging markets from the lows of Q2 last year. And there is continued healthy demand in developed markets as well. So we believe that our strategy is effective. We have clear growth drivers that we talked about, for instance, in the Q1 earnings cycle. And we are doing all that is possible to keep on investing in the business and to pursue those growth drivers. Recently, you saw the acquisition of Chipita, which specifies again that we have a clear strategy in terms of M&A and that our balance sheet allows us for that type of flexibility. So we are really driving at this point a virtual cycle. We continue to invest in the business, and we are delivering consistent results over time. We are also, as I said, optimizing our business by continued investments, making acquisitions. And importantly, last year, we talked extensively about to emerge stronger set of initiatives, which led to a material simplification of the business and also cost savings that are there to allow us for continued investment. So I truly believe we are positioned well for continued and accelerated growth. And we have confidence in the outlook we gave for 2021. And internally, we are working to beat that outlook.

Yes. Yes. Great. Okay. And we'll get to some of those topics, including Chipita as we go. But I guess right now, I'm sure you've been getting the question all week and leading into the conference, just around the cost inflation outlook. How are you thinking about the cost backdrop, inclusive of some of the discretionary investments that you're looking to make to fuel growth? And just how do you -- what's your thought process in terms of offsetting those costs, both the inflation and the discretionary investments by, I would assume, a combination of productivity and revenue growth management.

As many others, and it is common to the industry, we are experiencing higher inflation than usual. The areas where inflation is most acute is, for us, edible oil, it is wheat, it is packaging, logistics costs, but importantly also labor costs. It is, at this point, most acute in the U.S., but it is not only limited to North America. And some of our emerging markets are also facing some foreign exchange-driven inflation. At this point of the year, as we said quite a few times by now, I think you're right, I got asked this question many times this weekend and in the past week. We are well hedged for these exposures in 2021. And we can say that while the impact is a little bit higher than we originally anticipated, it is still manageable. In 2021, we intend to offset the extra costs by going after additional productivities, and we are doing a lot of work in the area of packaging and other areas where inflation is high and by, as you said, using the full range of revenue growth management to price away that inflation and to allow for continued investment. So fundamentally, I have to say, this didn't delay our plan, our original plan. The plan is the same as the original design. It has just some more additional pricing. And quite honestly, in few cases, we are investing even more because, again, the last thing we want to do is to cut investment and to offset this additional inflation. So I feel quite good about 2021. We are confident in our ability to price. We have proven over time that we can deliver a balanced [Technical Difficulty] is integral part of how we are going to run and how we are running this company. If you think about the incentive plan that we have, it incents marketing share. So keeping competitiveness in the marketplace is key for us. And second, volume growth is, again, another element of the incentive plan together with gross profit dollars. So we want to really strike the right balance. We believe that those investments that we have made, both in our brands and in our route to market with our customers and consumers, our brands are in a solid space, and we will continue to invest in the business, both in terms of growth in media, which is growing double-digit, sales execution to market. And having said that, again, pricing for us is not only line pricing, it is growth and revenue growth management, which is a price bet architecture, optimizing our mix, making promotions more effective and efficient and improving return on investment on our trading. So 2022 will be the year where the inflation will have its full effect into our P&L. But at this point, I feel confident that we can handle it.

Yes. And by handling, you mean in the context of the algorithm, nothing you're seeing now for -- in '21 visibility with the hedging rolling over gives you doubt on the algorithm? Or how do you answer that question?

We are going well and we're going to beat the algorithm next year as well. At this point in time, we are 40% covered as far as commodities and ForEx exposure for 2022. And so we are well hedged into 2022 as well. Obviously, it is the 60% that is over that respond that is posing some challenges. But again, we always start working ahead of time in terms of what are the pricing activities that we want to have. So we have quite a good visibility into the pipeline of pricing actions and pricing activities for '22. And again, it is not going to be blind line price increases. It is going to be downsizing and upsizing in some of our products to tap into the best consumer patience and protecting the right price point. It is about promotional spending, using data and analytics to have the best slate of promotional mechanics out there and ensuring that we get the best return on promotions. And that will optimize gross profit. So again, I believe 2022 is going to be another year where, importantly, we will continue investing materially into the business.

Great. Great. Vince, maybe we'll get you to the conversation here. In the context of what Luca just said, sorry, a little echo there. Just maybe we can get a little bit of a feel for your business in that context, perhaps differentiating by -- major category or geographies versus Western Europe and travel retail, just to get a sense for how the European block, inclusive of world travel retail, is trending.

Yes. Of course, Stephen, thanks for the invitation and for the opportunity here. If you look at Europe, I think it's a fabulous place, if I may. If you look at the size of this business, it is a $10 billion plus for our company. And if I look at the last couple of years and look at 2019, so the pre-COVID year, we have been growing Europe by plus 3.7% at those point, a remarkable step up. And then look, the COVID year was more reported at 2.5%. But as you mentioned, world travel, if I would take out for a second world travel retail, the underlying growth in Europe was close to 4% last year. And that shows 3.7%, 4%. Look at quarter 1, we have 3.3%, lapping a very strong last year already. So I think we are definitely on a good trajectory here where the momentum is visible in Europe. In the mix, as Luca was saying, it's a good mix out of pricing and volume, and also we drive consumption. In particular, if you look at the COVID year, if you ask about what happened there, I think we have seen a lot of our brands going very, very strongly. As people have been sitting at home, they were buying much more than ever, the blockbuster brands of their life. And I think what it means for going forward, if I'm looking out -- the consequence of that is, this was driving penetration in consumers and more people have eaten more of our brands. That will not disappear even COVID might look different going forward, hopefully, for all of us. But that penetration is driving loyalty. So I'm very confident also looking forward. One is given penetration driving loyalty. The other thing is people will not go back to the old ways of working and living, as you have seen pre COVID. So even more in-home consumption with the -- versus the pre COVID. So I think we have leveraged very strongly the COVID period of time in strengthening our business and strengthening our brand going forward. To your question about countries, I think we have very broad-based growth in Europe. Definitely, if I want to pick a couple of the bigger ones, we have seen U.K. in '19 mid single-digit growth and doing it again in quarter 1. Germany, mid single-digit growth again in quarter 1. If I take Russia, high single-digit growth full year last year and double-digit growth quarter 1 this year. So really strong momentum across the board. And then in categories, I think Europe is a place where a lot of our core snacking categories are coming together. We have a massively well-developed chocolate business in Europe alongside the biscuit business next to that one. And if you look at what happened the last couple of months, we have seen a very strong build in chocolate. So a strong growth during COVID and keeping that one. We've seen a bit of a less growth in biscuit versus chocolate. But still, there was momentum there. And then we had our gum and candy business, which is not that big in our case. It's -- the gum business is -- it's 3% of the total European business. But we have seen the drop of the category. We have seen the stepping out of consumers for the sake of the occasion of not being out-of-home was driving that one, which we see now coming back on the whole thing. So overall, I think we are in a very good place category-wise in the sets we are. If I look then at the markets and the channels, I would say, definitely, we have seen a big jump in e-commerce. The good thing for us here is we are over-indexing in e-commerce.

We might have lost...

We've lost I think.

No worries. Luca, maybe you can answer this on behalf of Vince, because when I -- we talked a lot about the global brands that Mondelez has in the portfolio. Vince is back?

Yes. Can you hear us, Vince.

I can hear you now. Can you hear me now?

Yes. Okay. Well, I'll ask the question and then either one of you can answer or both of you can weigh in. But Vince, what I was saying is building on what you had talked about, just in the context of -- we talk a lot about your portfolio and a balance of global brands and local jewels. And I'm curious as to how those dynamics are managed. And maybe biscuits in Europe is an example of that. On the one hand, Mondelez has the $1 billion of incremental revenue target for the Oreo brand globally. Europe, I'm sure it played a role in that. So I'm curious as to how your plans fit into that overarching target juxtaposed against what you're trying to do with a master brand strategy in Europe and what you're trying to do with brands like LU and some of the more local jewels in the portfolio and how those 2 objectives become complementary and not competing?

I think they're definitely complementary because if we look at the biscuit business in particular, as you say, the mix out of local brands and more global brands is a strength we have. Because you need to see it from a consumer point of view, where if you live in a market, you have -- take France as an example, as you mentioned LU, it's the #1 brand in France in biscuit. And people have a very long relationship with that brand. At the same time, you have an Oreo, you have a belVita, you have Milka biscuit there, which is a complementary fit to the occasions throughout the day. And if you look at what we have done over the last years in Europe in particular in biscuits, we have brought outside the key markets, call it France in particular, brand concepts like belVita, a breakfast biscuit was not existing before. We made that market. Oreo, across Europe. We brought the combination out of our chocolate brands with the biscuit together, the Milka Biscuit range, the Cadbury Biscuit range. So those have been very specific, brand-specific opportunities, new to the market, driving distinctive positioning. At the same time, we started where we had traditional brands, master brands like a LU in France, like an Oreo in Italy to expand those brands across the eating sensations of biscuit. And where we don't have those brands, we have launched now a brand. Take Germany, it's a big market in biscuits. So besides the Milka biscuit and besides the Oreo biscuit, we have launched last year LU with the intent to have there a master brand for the future where we can bring under LU all the capabilities and all the eat sensations consumers are looking for by leveraging internally the capabilities we have and consumer-wise offering what they want.

Yes. Yes. Luca, I don't know if you want to add anything, but I think the distinctive positioning part of that is maybe where there's -- is there any perceived confusion between a global strategy and a local brand strategy, I think as long as those brands have distinct positioning, then both can work complementary going back to what we said before. Maybe also on chocolate, which is obviously a huge category, Vince, for you in Europe. It's probably a similar dynamic between the local brands that you manage and the global brands like a Cadbury and a Milka. What is something perhaps that investors misunderstand or underappreciate about that business or about how you're managing that business? I'm particularly interested in opportunities you might see in seasonals or some of the marketing partnerships that I've seen you do with the Premier League in the U.K. or the Bundesliga in Germany. Just anything you could add to that conversation would be great.

Absolutely. And I think chocolate, if I may, is definitely a jewel we have in our portfolio here in Europe. Because chocolate, if you think about the different markets, we have, in some markets, share positions of above 40%, take Norway, take Sweden, take Ireland, and many markets where we have a 30-plus share, U.K. to mention first, but also Belgium. So we have really strong positions in major markets in Europe. I think about Russia, where we just have a 20% share, but growing year-over-year, literally 1 percentage point in the last 2 years in a nice way. And again, it's the duality between brands, local brands and sometimes more global or international brands. I think it's -- if you look at the growth rate, chocolate has shown, I would say, a particular step-up in growth in the COVID times. I think it seems to be that it's the daily treat people don't want to miss, and it was taking much more home and consumed there as a family-sharing opportunity. The nice thing in our case in chocolate is that we have -- we cornered the signature taste or the taste of the nation in most of the markets. If you would have a dispute with the British consumer, he will tell you it's Cadbury. If you have one with the Germans, he would say it's Milka; in Belgium, it's Côte d'Or; in Sweden, it's Marabou. So that means -- gives us a ton of power. And back to biscuits, we can leverage those signature taste into other segments, into biscuit, into pastry, think about Chipita, which I'm sure we'll come later -- in how to bring those signature taste into that thing. And then there are occasions in the year, which we are, I think, quite well underway, which is the seasonals business, in particular, as you mentioned before. There's a huge Christmas business, huge Easter business, which is spiking and we are obviously very well underway. And then we drive very strong core activations behind those brands. The latest one we have across Europe is the sponsorship we have with our -- with several football teams. Nothing better than these days to be in football in the upcoming weeks. But that's what allows us, besides engaging consumer, it allows us also to make customer-specific bundles that we can get them into the store in a proper way. So I think it's a very holistic, I would say, system out around this chocolate business, which is starting from the heritage of all these brands, the great taste consumers love and then the activation we make around that in season and nonseason.

So as you, Luca, maybe getting you back on the conversation, just -- and Vince mentioned Chipita -- just from an M&A standpoint, where you've been quite active the last several months and quarters, years even, how do you approach M&A? Do you view M&A at this point now as a core competency of Mondelez? And what role does that have in building out your portfolio? How much more appetite for M&A do you have? And then we'll circle back on Chipita specifically.

Yes, there is more appetite for M&A. And there is a clear strategy behind all the acquisitions that we have made in the last 3, 4 years. And the overall intent is to accelerate our overall growth rate and to create value for our shareholders. We are increasing exposure to some of the snacking segments that are fastest growing, whether it is that we think about Gourmet Food in Australia, Grenade in the U.K., Hu in the U.S. and Perfect Snacks well-being platforms that have high-growth rate, unique propositions and tremendous revenue synergies ahead. Think about the application of Gourmet Food outside of Australia or Hu being expanded from Whole Foods as a retailer to others. Perfect Snacks, for that matter, having applications outside of the U.S. or premium which is the other element that came into place as we looked at these acquisitions like Gourmet Food, Hu and Tate. We are trying also to fill geographical space. We under-shared in terms of biscuits in Australia. And so that's where we tend to create or want to create more scale in this case and being able to push even more category at chocobakery or Oreo. And we are also making strides in those adjacent categories that we have been talking about, patient basis as next part and obviously Chipita is in that can, but also we can grow and others address that for me. We have made $1.5 billion in terms of revenue in terms of acquisitions for the last 3 years. These are growing at high single digits. Obviously, for some of these businesses, call it [ whole ] some restrictions and challenges, potentially look after the big peak of cold last year in Q2 all these platforms are on the ground and growing steadily above the average of the growth rate of Mondelez. And there are still a lot of untapped opportunities in terms of distribution, in terms of geographical expansion and in terms of new launches. Vince just mentioned about Chipita and the application of our chocolate brands into that platform. But Chipita, as a matter of fact, can be expanded geographically from the current places where they are. So there is more appetite. There is a strategic rationale behind all we are doing. And when you look at our balance sheet, whether it is the coffee joint ventures that we have for which we feel very, very positive, and I think those are tremendous potential platforms. But really thing is, I think there is more value over time for our investors to see those funds being redeployed into snacking assets. And so we have that firepower. We will remain and have proven to be very disciplined in terms of strategic fit and financial return. And we will be patient when these assets come to market. It is always a matter of curating the relationship. And we are working hard to make sure that we have a pipeline, not only for what we have just now [ but ] for years to come.

Great. And I guess just in the context of what we saw this week in the further sell-down of about 2% or so of your KDP stake. Should we view that in the context of what you just said in terms of just optimizing the portfolio and reinvesting financial assets into strategic direction? So is the KDP stake sale [ then through ] the Chipita acquisition? Or is there anything you can give us some inside into your thought process on that?

KDP is a tremendous company. Clear strategic direction, management executing very well. I think there is still a lot of potential in the stock price of KDP. The sell-down this week is entirely linked to Chipita. Obviously, we have to fund a $2 billion acquisition. And we thought it was the right time to put some of KDP in the market and taking advantage of the situation. But I want to make sure there is no shot of it out. I still believe KDP has tremendous potential. That's why we sold I would say only $1 billion because there are other avenues we are pursuing to fund the rest of the acquisition. And yes, no other goals than the Chipita acquisition.

Okay. Great. Vince, on Chipita, I guess Luca mentioned a number of acquisitions that the company has made. Grenade as well in the U.K. Just I guess talk us through from your perspective why those assets make sense for your market? And then to Luca's point about Chipita being applicable to other markets around the world, just the conversations you've had with your peers in terms of how you expect that to play out.

Yes. Very happy to do that one, because I think what Chipita does, the way I see it, is it's opening up for us a big new category to play. Now we have done a first step in the cake and pastry territory in U.S. with Give & Go last year. But now this is Chipita in Europe, we have possibility to go in cake and pastry, which is a really sizable segment. Think about the size is $65 billion around the world. And to give you comparison biscuit is $100 billion around the world, so it's a really big and quite fragmented market. What Chipita gives us is capability in the countries where they already operate, which is more the Eastern European markets, expanding our footprint in those markets even stronger. But what it does also give us is kind of this ability to bring it in other markets where they have been not been in so far. And then again, think about the combination we can leverage beside execution by combining the brands. You can easily imagine Cadbury croissant coming up or a Milka croissant coming up, depending on the brand and the country we want to go. But also think about that croissant is such is a well-known product around the world. So it's not just the Europe, I would say, which we think about how to bring cake and pastry or croissant itself into other markets. So I would say it's an entry ticket for us to play a new game in an adjacency which is very relevant from a snacking point of view. It's something which is more linked to a different occasion in the day, more between the morning and the lunch time, so it's a very accretive play also to be there in terms of consumption, in terms of snack. [Technical Difficulty]

Yes. It happened again. I think he gets excited and then the bandwidth can't handle the excitement.

Yes. Sorry, go on, Steve.

No, I was just going to say, if you wanted to finish any thoughts that you thought Vince was about to make.

No. I think -- I hope Vince finished thoughts.

No. I think I hope I expressed my excitement on that business. I can see in my head already many things coming together. So back to your point, I think it's enough. From location point of view, geographical footprint, capability point of view, brand synergies, the music in my head starts to play.

Yes. Yes. So one of the things that I think has been really remarkable about how Mondelez's overall corporate strategy has evolved the last several years is just the power of local first as a kind of a cultural paradigm shift and the growth, sort of the animal spirits of growth of that, I think, has unlocked, at least that's the way -- those are my words, I don't know if you would agree. But I'm curious how that plays out market by market, and how, Vince, from your perspective, you feel you've got more freedom in that local-first -- with those local-first principles and how that benefits your business, but also how the organization, and maybe Luca can weigh in on this, but kind of puts up the appropriate guardrails so that what -- Vince, what your business might choose to do with a global brand like Cadbury or Milka or Oreo in Germany or Russia isn't too far-afield for the brand equity in the United States or in Asia. And just how that is governed and how that balance is made within the company. Any insights would be fantastically helpful.

Yes. I think we found -- if I may, we found the sweet spot between that, what needs to go first. I think this local first mindset, and I think I mean what we can say is it's more than the mindset, there's also action in place, has done well. And I think no matter what part you look at, we start with the country and the consumer in the country first. And as you mentioned, the brand, for example, only a couple of brands are steered on a global base in terms of keeping the guardrails for those brands in a consistent way, call it an Oreo, call it a Cadbury, call it Milka, because those go quite broad around the globe. But whatever you take on other brands, big brands, I stay in Europe, LU in France, Côte d'Or and Alpen Gold in Russia, those are in the local hands. They steer the brand, they steer the equity and they steer the portfolio of those brands. Then I think what we try to do behind the scenes, if I may, when it comes to production, when it comes to elements, how can we platform those things? Again, I go now into the future. Think about the Chipita business coming up. The way how the -- I call it the chassis of a croissant gets produced and then we want to leverage the scale. But then when it comes to how does it come in, price, pack, what's the right offer in terms of size, price point? What's the right chocolate going there? What's the right sequence in launching those things? That's on a country level. So I think we've found the right middle ground, which is much more down to the country. They are leading the local brands. They know them better than anyone else. And we found, I think, also that gives the success of Mondelez today. If you look at the performance of the local brands and the global brands, you see both are doing very well. And that is different maybe to the past, where we had more on the global side. Now we have the duality of those 2 sides of the coin, which is exactly what consumers are looking for, and the mix is very different country by country.

Got it. I want to hit a couple of more topics. We have -- we're running up towards the end of our time. But Vince, I guess we'll go maybe to you first on this. While we have you, I think, is a good opportunity to talk about Russia. We talk a lot about China and Brazil, India. But I think Russia, as big emerging markets, tends to be talked about less. Can you just frame the opportunity that you see in Russia? And I think the company as a whole is pretty excited about the opportunity there. Just how -- what the growth rate is projected to be in that market over time. And where you see the biggest opportunities in Russia and Eastern Europe in general?

I can maybe start first from the business where we stand today. I think, look, we have a very strong business in Russia in our both key categories, which is chocolate and biscuit. We are the #1 in both. And we keep growing share for quite a while. Now as I said before, if we look Russia, the performance in '19, it was a high single-digit growth in 2020, sorry, and it was a double-digit growth in quarter 1 this year. And that's not the first time. So we see high growth in those markets. The great thing there is, again, to build on your previous point, it's the mix out of local and more global brands. If I take chocolate again, we have a fantastic brand. They are called Alpen Gold, which is #1. But right behind Alpen Gold in chocolate, we have Milka. So the duality to have a 2-tier opportunity in many ways, in positioning, in pricing, in playing different corners and occasions, is just a fantastic play. If I take biscuits, the same thing. We have a local, very strong local biscuit brand called Jubilee. And then, of course, we have our Oreo and the Milka chocobakery there. So again, the mix out of those things allows us to be from a basic offer to a more premium offer, from a -- from a treat eats to a more basic eats to play all that element. And I think the team is doing a fantastic job keeping that balance and growing in sync those elements. We're investing a lot in this market. for all the good reasons, we see a great return coming, investing in capacity, new lines, we're investing in the market, year over year, double digit this year again in the working media side. And it comes back very fast and gaining share the last 24 months month over month.

Great. Great. Luca, when you think about you hear opportunities like Vince has described in Russia relative to everything else, can you just give us a little insight into how -- what the capital allocation process looks like and how you make the decisions between investing incremental dollar in one market versus investing it somewhere else?

I speak quite often, as it goes down to Russia, as we go down to China, India, those markets really basically a priority [ for us ]. But I think even if you look at some other markets like the U.K. and the U.S., we are investing quite a bit in those markets. We have entrenched a bit from our capital expenses previous to 2018 where we were 4.5%, even 5% in certain years in terms of capital expenses as a percentage of revenue. We are now running at 3.5%. We are investing selectively in growth because we have capacity pretty much around the world. But obviously, given the growth that we're seeing in Oreo and chocolate in Russia as one example, we are investing in those places. India chocolate is the other one where we are increasing capacity. Now we have most of the infrastructure in those countries. So we're putting down more lines rather than investing in new facilities. So the cost is more limited than before. But as we look at the strategic relevance of this market, obviously, those markets take precedence and as are markets that can grow high single digits. It can expand to double digit. I didn't talk about Eurasia, which is left and right of Moscow. And we have tremendous opportunities in terms of distribution. Our brands are well-known and they are aspirational for those parts of the world. We can push those through even more in the future. So in terms of capital allocation, CapEx around those countries take precedence. Obviously, we want to invest in go to market, and we are doing so. We're working that in working media. We are investing in quality, in R&D facilities, in marketing. And that is really the #1 priority for us. Importantly, the second priority for us is investing in M&A. And if you think about potentially step changing the size of some of these markets where Russia is still a market that prices below the $1 billion mark, given the potential of that country to make it bigger and enjoy the same growth rate on a higher base. And so M&A is the second one. The reality is, over time, we have come to the conclusion you mentioned before, local and global brands, that investing in one place at the expense of another, we notice that is the right strategy. So we will be balanced but obviously, certain markets like Russia, China, India, they take precedence over others. The other, next one where we are investing heavily and thinking about how we can step change the size of the business is Southeast Asia. But again, the growth potential there is tremendous. Africa being the other one. I mean, the amount of business we have in Africa is already quite good, North Africa and South Africa. But the sub-Sahara area is still hugely untapped. And again, it is upon us to make investments today to get the benefit in the years to come.

And I guess linked to that, we had a discussion we could see around snacking, right, as I think it's become central to your strategy, not just the ESG strategy, but it's become part of the company strategy. How does snacking made right influence your capital allocation decisions kind of in the context of what you just said? Is it complementary? Is it a separate consideration? How do you think about that?

We truly believe we can create value by building a sustainable snacking company. And again, we want to have evolved. So we are not going in every direction, Steve. And I would say that is one of the best things for a finance person, I need to know where demand is going and what we are getting in exchange. And so as you think about sustainably sourced ingredients, I mean we are the chocolate company. And we want to make sure, for instance, that Cocoa Life is there to support communities, to support people in company-wide and in other places, obviously. And we want to minimize the climate and landscape impact. We want to have a diverse and inclusive and engaged workforce. We want to sell products that meet the always evolving needs of our consumers. I think there is an added benefit to some of these initiatives. When you think about zero waste, obviously, that means lower costs as well for Mondelez. And so I'm confident that by being focused, by doing what is right, a, we can create value. And quite honestly, some of these initiatives pay for themselves. So overall, I think, over time, there might be years where we have to invest more than others. And there might be a little bit of pressure on earnings. But over time, I believe this will be EPS-neutral. And it is simply part of how we win plans. I mean as we think about how we engage with consumers, we need to think how we engage with stakeholders and we get the sustainable growth that we want to have together with our stakeholders.

Great. Well, I thank both Luca and Vince. Vince, I thanked you for joining, I think, 3 times, so I appreciate that. And thank you again for your participation today. Thanks, everybody, for listening. And thank you, Mondelez, for attending the conference. I wish everybody a great event for the duration. Thank you.

Thanks so much, Steve.

Thank you, Steve. Thank you very much. Bye-bye.