Monster Beverage Corporation ($MNST)

All right. Thank you, everybody. Welcome. Welcome to the next session. For this session, I'm thrilled to welcome for the first time the Monster Beverage Corporation to the conference. With us today from Monster are -- sorry, Chief Executive Officer and Vice Chairman, Hilton Schlosberg; Chief Executive Officer of EMEA and Oceania South Pacific, Guy Carling; and President of Asia Pac, Philippe B. So thank you guys for joining us. Before we start, we're going to have Mark Astrakan from Investor Relations address the safe harbor statement.

All right. Great. So before we begin, I would like to remind listeners that certain statements made during this conversation may constitute forward-looking statements. Management cautions that these statements are based on its current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of the company that may cause actual results to differ materially from the forward-looking statements. Please refer to the company's filings with the SEC for a discussion on specific risks and uncertainties that may affect its performance.

Very good. Thank you, Mark. Okay. With that, let's dive in. And I guess, Hilton, thanks again, thanks again for doing this. I think it's been evident to everybody who's observed Monster for a long time, but especially coming into this year, that just exceptionally strong growth, exceptionally strong growth, lots of both category momentum, but also company-specific momentum, not only in the U.S. but globally. I guess for everybody, including those less familiar with the story, I guess, what do you think are the key pillars of that growth story today? And is there anything that investors you think underappreciate, that would be interesting to hear.

Sure. Before we start, I'd just like to talk about the category generally the size of the category because we always try and talk about the opportunities. And this is from global data. But the energy drink category in the U.S. is estimated to be about 26.9 billion. And globally, you talk about 89.4 billion. So that's a percentage of 31%. That's the energy drink category in the U.S. relative to the global market. If we look at it internationally, we've got Guy here from EMEA and OSP. And you're talking about the energy drink category as a percentage of NARTD, which is a nonalcoholic ready-to-drink business. You've got in EMEA, you've got 13%. In LatAm, you've got 8%. And in APAC, you've got 9%. And in the U.S., we're talking about a percentage of 19%. So -- what's interesting is as we look forward and as we address the consumer, which is something that we're very passionate about and that we focus on, we can see that there are opportunities not only in the U.S., but also very much internationally. The group today is in 160 countries worldwide, and it's something that we're, again, very passionate about. The percentage of sales in the last quarter on international was actually 45%, which is a very significant number relative to other consumer goods industries. So we're growing and we're expanding internationally. And I believe we've got the organization to be able to equip and deal with the growth. So one of the pillars that's very key to us, as I mentioned earlier, is the consumer. And the consumer has a really an insatiable need for energy. They're always looking for energy. They need energy, and we are supplying that energy. So against that factor, we are an image-related brand that serves a real function to a consumer. And as the pricing mechanisms in the market have taken place since COVID, we're actually very favorably and economically priced relative to ready-to-drink coffees from coffee houses and in fact, CSDs as well. So you put all that together, you've got a category that's driven by need with an image that consumers aspire to. And we've got distribution through the Coca-Cola system, which is probably the best distribution system in the world and great relationships with the Coca-Cola bottlers and also with the Coca-Cola Company, and we could talk about that maybe later at this time. So all in all, you have a consumer that's motivated to buy the product that we're giving, I believe, the product at the right price. And overall, we have a range of different products today and different offerings from the mainstream offerings to Monster through our strategic brands, some of the brands we acquired from -- the Coca-Cola Company at the time we did the deal in 2015, the redirection of restructuring of interest. We have that. And we also have our affordable brands, which are really geared towards those countries where the consumers cannot afford a Monster drink, and we've tailor-made our affordable brands to service that market. And the affordable brands are now in about 39 countries in the world. So they're growing as well as the market develops. So I really believe we're in our infancy. There's a lot of runway for us. And we're doing what we can to continue to achieve growth. We had great growth in the first quarter. As those of you who read the first quarterly statement saw all regions were in double-digit growth. Some regions like Guy was in, I don't know, multi times that, which is something we're really proud of because the category in EMEA is a lot older than the category in the U.S. So maybe Guy can talk about -- a little bit about that and get his sentiments on what he sees as the opportunities in the business and the pillars that are important to our consumers.

Thank you, Hilton. The category is older in EMEA, not across the board, but has been around for longer. But I think what's exciting about the category is it continues to evolve structurally from a consumer perspective. And essentially, energy drinks have become a an everyday beverage. There's a strong value proposition, the strong brand equity, there's functionality and there's innovation across zero sugar and sugar energy drinks. And what is taking energy into a multi-occasion, multi-daypart kind of beverage. So we see energy drinks increasingly consumed across all the dayparts, but also by consumers in multi-dayparts, so not just one time of day. Across occasions, the basic I need energy, but also from relaxing at home, energy is now 30% of consumers drink it as a treat as well as for sport as well as on the go as well as the kind of generic pick me up. So across the piece, the category has just broadened its kind of profile. And that means it's able to recruit consumers, both male and female across all age groups. And I think in EMEA at the moment, we've got 30% of consumers coming into the category on an annual basis. So it's a huge amount of recruitment into the category. But then I think the product offerings enable the kind of relevance of the products to people's daily lives, enable people to stay in the category and then ultimately increase their consumption. So through the offerings, we're seeing 20% of energy consumers are buying more energy than they were a year ago. So there's more consumers buying more and staying in the category through dayparts and through the age group. So it's there.

Very good. And Philippe, let's talk a little bit about your region as well because it's the region with significant per capita headroom where affordable energy is really laying the groundwork for what I think can be very explosive category growth and development. How are you positioning the business against those opportunities? -- and how you frame the opportunities?

Okay. And you're very right. If we look at South Asia, Southeast Asia, East China, you have more than 4 billion people in that part of the world. It's half of the world's population which is living over there and the category is underdeveloped, okay? Hilton talking about the U.S., guy about Europe. In the U.S., the per capita consumption is 54. In Europe, it's 38. On average in Asia, it's 12, okay? So it's just showing we have half of the population, which is only drinking 12 serving per person per year on average, which is showing the size of the opportunity. So the category is underdeveloped, but now growing. We have seen in a place like India where the category is even less developed the consumption per person in India is only 5, but it was less than 1, 5 years ago. okay? So it is showing that in all these countries, when we find the right product at the right price in the right pack in the right channel for the right occasion is we are able to unlock the potential of the category. But Asia is very complex because you have countries as diverse as Japan or India, if I take the other side of the spectrum. So we really now segmented Asia in 2 different segments. What we look at the developed markets, Japan, Korea, Taiwan, Hong Kong, Singapore, which are more premium markets where we are very happy with Monster. We are now a leader in the vast majority of this market with significant shares. And there, the category is very similar to what we have from Guy, okay? Category is already developed, is premium. We continue to innovate, continue to develop new occasion, continue to chase every distribution opportunity. For instance, in Japan, we now -- we are distributed by Aside, okay, which is the last country where we are not with the Coke system, -- but on the back of that, we just agreed with CCBGI, which is the main Coca-Cola bottler system to be in their vending machine because they see the category as an incremental opportunity for them. So in the developed market, continue innovation, distribution, making our brand more relevant to more people. In the developing markets, your South Asia, your Southeast Asia, China, first is maximizing the Monster opportunity. We believe the pop -- there are 4 billion people. We believe there are dozens of millions of people who can afford Monster, who like the lifestyle of Monster. We like the taste of Monster. And first is maximizing the opportunity for them. But it will not be everyone. But now in every of these countries, we found a way to recruit new consumer with Monster. I will talk about China and India a bit later, but we now, for instance, launched Monster in Thailand. Monster was not in Thailand. We launched with Swire in Thailand in quarter 1 because we adjusted some of our proposition or distribution. We find the right consumer for Monster in Thailand is on the developing of the more affordable side, we have been adjusting our proposition, okay? First is Asia is a vast majority of what consumers are drinking in South Asia and China is noncarbonated. -- okay, which need a different taste, a different packaging to reach the right price point. And we have been learning over the past years to say, how do we complement Monster with the right proposition, which is helping us to enter a full new segment where we never offer the right product to the right consumers. And then in the part that is carbonated, it's a matter of finding out to have the right price and the right pack. We just launched Pakistan 2 weeks ago, where you have now 250 million consumers who are not serving until now, and we are unlocking these type of opportunities in the more developing part of Asia.

Very good. Very good. Hilton, Philippe kind of makes an interesting observation. I mean the company over time has become more and more a portfolio of brands within energy. Obviously, Monster is still at the core. But in order to address different consumer needs, the company has evolved the portfolio to introduce brands to serve those needs. As you think about the growth opportunities over time, how much of those opportunities is Monster able to serve? How far can that brand go without diluting the magic that represents this core of the brand versus how much of growth is going to be reliant on kind of satellite brands that you've developed in support of Monster?

That's a great question because the Monster demographic is very clearly 28- to 35-year-old males. That's -- that's a demographic. And what's happened is the demographic has broadened as some of our consumers have got older. And also women are huge participants in the energy category today. So we're in discussions. We have meetings with CCI and Hellenic and CCEP here in Paris. And the numbers in the European markets almost 45, 55, which is very different to how the brand started. And in the U.S., we see that there are big opportunities for -- to address the women consumer. Traditionally, we've had a 16-ounce can, which is 473 milliliters. And that's been the can that we've used extensively other than for some new products, which I'll talk about. We're now directing 12-ounce size cans really to address a more female-forward market because if the research that we've done is that people don't want waste, women don't want waste and they'd rather get a product that's a size that's convenient for them to drink. So that's something we're addressing. Historically, and that will be in the Monster Ultra line because we're still very passionate about Monster. We believe that Monster can gravitate into other parts of the new consumers in the energy drink category. I mean what have we done already? We've got Rehab, which is tea. We've got Monster Java, which is our coffee line that we've had for many years. We have regular Monsters, we have juice Monsters. We have Monsters that are Zero Sugar, the Ultra line, which today, the Ultra line, if it stood on its own, it would be the third biggest category in the United States. So it's biggest -- sorry, third biggest energy group of brands in the United States after Monster and Red Bull and Monster and Red Bull always kind of neck and neck last week, we were exactly the same in the U.S. This week, if those of you who read weekly Nielsen, we're ahead of them. And next week, I don't know, I hope we'll stay ahead of them. But that's the way the U.S. market has emerged. We have -- here we do performance energy and that we do under a very different brand. It's called Reign. And we do that under a different brand. We have other brands for wellness called Storm and other brands for particular parts of the market affordable. We use Predator and Fury depending on trademarks. We have a great brand that we bought from -- as a result of the Bang collapse and Bang is a really good brand, and we're using that to test -- we start in the U.S., and we're doing that to test as affordable in some markets internationally and in Europe and in fact, in Asia. So I think that we believe we have the ability to use Monster in a particular fashion. But then we also have the ability to create new brands to address particular markets that we don't think will resonate well with the Monster brand.

The one brand you didn't mention is the brand you just recently introduced Per in the U.S.

Yes, that's directed to a female-forward consumer. And we're testing that in certain markets where that demographic shops. And we've spoken about it on our calls, and we're keeping a very close eye on it. We're monitoring its progress. The media, it launched a month or so ago. The media is about to kick off and it's very much directed. We've got a total women structured management team that's running that brand. They've just kicked off the media. So I don't want to talk too much about it until we know the green shoots are actually growing. So -- but we do. We have this brand called Float, which is -- I think should do well. But again, it's in the hands of the consumer and the brand has just been launched.

Great. Guy, as we think about that theme as it relates to your markets, as you mentioned, in some ways, the original energy drink markets here in Europe. How do you -- at the same time, the market is maybe less developed than some of the zero sugar fitness-oriented brands that we've seen disrupt the category in the U.S. How do you think about positioning the portfolio here in EMEA to maybe get ahead of those trends and make sure that Monster is at the lead?

I think it's been interesting to see how the energy category, whilst being older in Europe than the U.S. has developed in slightly different ways over time. I think one of the things we see in Europe, especially is less segmentation than is in the U.S. And I think the Red Bull and Monster that have been around for a long period of time, occupy a large piece of consumer consumption in some of those segments. So we've seen -- you've all heard and the phenomenon that's been on social media, White Monster, but Ultra White, which just even this year, according to Nielsen, is growing over 50%. It's a 12-year-old SKU. It's one of our lead SKUs and is growing over 50%. When we first took brands like Reign into gyms, we've discovered Ultra was already there. Ultra as a brand platform. And again, here would be like the #2 brand in Europe. It's 50% female and it's 50% male. So it's actually bringing in female consumers in line with the category. So I think we see a strong role for our core business in Monster. Our fantastic relationship with the bottling partners, again, we CCP with Hanic this week, are taking our existing Monster SKUs into more and more channels of distribution, especially away from home, food service, and it's giving the fan favorites a platform in channels and occasions that it wasn't previously available. We're also increasing our multipack business of those core foundation SKUs, the fan favorites, so people can take 4 packs, 9 packs, 12 packs, home, ready for a treat, ready to relax at home. So we're getting half of our growth, and I think that's what we're excited about from our base business. And that is different from the rest of the category. So the category as a whole is in kind of a decent double-digit growth. But outside of Monster, it's predominantly through innovation, whereas we're actually growing in line with the category from that existing base Monster business and SKUs. And then we're getting an extra double-digit growth from our innovation. And the innovation is coming in sugar. So this year, we talked on the call our Viking berry product with the best innovation launch, most successful we've ever had in Europe. Full sugar, we've got a really strong consumer base that wants full sugar, but 47% of our consumers only drink sugar energy. And sort of deliberately so. And so we've got innovation there. Then we've got innovation in the Ultra line. Innovation last year, Lando Norris Zero Sugar was brilliant. 25% of its consumers were new to the category, 25% were new to the brand and 25% were drinking more as a result of the innovation. And obviously, tied in with a wonderful asset, a hero, people could sort of hold in their hand as they were consuming. So innovation is a huge part of what we do. And I think growing our business 55% through the existing SKUs and 45% through innovation to grow ahead of the category is a real kind of foundation for the future. And then, I mean, the portfolio, the strategic brands from -- that we've had since the Coke deal over time, Relentless in GB, Naru in Belgium, Burn across countries play a really important role. It's a different consumer looking for a different lifestyle, different price point, different personality. And the affordable business we have with Predator and Fury in Africa, I think it's really important. It's affordable vis-a-vis European pricing. But in Africa, it is just mainstream energy. The pricing compared to CSD matches that from Monster in Europe, and it plays that same role. It has equity. It has a value proposition. It has fans. We do marketing to support it. And across Africa, we've seen Predator and Fury turn into the most valuable brand in Africa from a Nielsen sales perspective. So different things for different places and different consumers.

Yes. Each of you mentioned partnership with Coke. So let me spend a minute there because I think from the outside, that partnership has partnerships, both with Coke and the bottling -- the bottlers seems to have only strengthened over time. And it's a time when we just talked about, there are more brands that are being activated within the Monster portfolio. There's more innovation. We'll talk about that in a bit. There's more packages. There's more sophisticated revenue growth management, all of which is not able to be accomplished by you alone, right? It's in partnership with the Coke system.

We could never operate without the Coca-Cola system. I mean, in the U.S., it was somewhat easy. But internationally, it is an issue because when we started off internationally, we had to find distributors -- it was tough to find them. There were a lot of trademark issues, a lot of issues dealing with competitors. And the one good thing that we've achieved with the Coca-Cola organization and particularly with the bottlers is a seamless manner of operating a business where they are the distribution partner. So we haven't had to go and look for distribution partners. We haven't had to kind of analyze the better and the worst. And this is a long-term relationship, and it's worked really well with the bottlers. And with the company, we have a great relationship with Enrique coming on board and John Murphy. And we're working together to build a great business.

I mentioned more innovation. Guy talked a little bit about it in EMEA. But in the U.S., you've got limited time offers coming to the market really for the first time. You've added some splashes of flavor strawberry to the core Monster. These are things we haven't seen Monster do before. At the same time, there's a big push right now on more sophisticated price pack architecture, RGM. Maybe talk about how that evolved, why now is the right time? And how much runway you see on those initiatives?

Well, RGM, we always had an RGM department. And Lvely, they've -- we've built it up and we're working more aggressively with that department on the basis of kind of looking at opportunities to increase price, opportunities for different packages for different sizes. And what Guy said earlier about EMEA is 100% true of the U.S. I mean we were in -- we've been in 4 packs for a long time. We've been in 8 packs. We've been in 16 packs. We've been in 24 packs. And the skills that this group is able to deliver to the organization is exactly what it should be doing, and that is advising which packages, which sizes. For example, I spoke earlier about the 12-ounce we've got 12 months 24 ounce that's -- 12 months 24 pack, I'm sorry, that's going, for example, into the club channel. And these are all initiatives that have been moved by the RGM department. The increase in price in November 1 was very much structured by that department or advised by that department because it wasn't a one size fits all. It was a mix, and we said that on our calls of different kind of structures for different markets, some with promotional allowances, reduction of promotional allowance, some with increases in prices. So it's a kind of mix of the 2. And then we've always had an aggressive innovation pipeline. As Guy mentioned, innovation always for us, is incremental to the core. Our core grows. Our sugar products grow, our nonsugar products grow more than the sugar products. But overall, we move ahead with innovation. We've always had good innovation, but this year has been exceptional. We have the Americas 250 celebration, and we have a number of SKUs that are limited time offers that are addressing that particular situation, which is -- it's something very special in the United States, and we're really privileged to be able to offer products across the board to satisfy that kind of opportunity. So we have limited time offers. We have a Monster juice. We have red white and blue, which is an Ultra line, which is -- if you look at the recent Nielsen that's screened right up near the top of the charts in the Nielsen SKUs. We have limited time offers for our bang line for our Reign line. And we also have a limited time offer, which we may keep as a permanent offer for one of our other brands that we acquired from the Coca-Cola Company, which is Full Throttle. So there's a lot of great things that are happening. This year, we've had a full calendar of innovation. And yes, we did and have launched our -- what we call our flavor shots. Initially, they were launched with strawberry in both regular and zero sugar variants and actually are doing really nicely. So in the autumn, we come in with vanilla shots which will be the traditional classical master energy drink and the zero sugar drink with a shot of vanilla. And that really does make a difference to drink and gives the consumer an additional reason to purchase a product.

And your confidence in the pipeline, one of the concerns is that there's so much this year, so much incremental innovation that will be hard to cycle. how do you feel about that?

We've got a good calendar for '27. I won't talk much about it, but there's a good innovation calendar for '27. And some of these LTOs, we maybe bring back as LTOs in 2027 as well. These LTOs for the Americas 250 could very well sit as 4th of July promotion. So there's a lot of great things that are happening, and we just got to stay true to our course and run our business, run our play, which is what we've always been. That's why we've never attended these conferences. We've been running our business, but we have Mark Aster now who's -- whoever he is, IR head, there he is at the back. So he makes us come and do these conferences.

Well, we all thank Mark. Philippe, maybe pivoting back to your markets and really focusing in on India and China. You mentioned just a huge theoretical runway for growth, which has been there for a long time, but it really feels like we're seeing inflection. I think India doubled essentially in the first quarter. To what do you attribute that spike? Do you think this is the moment where you can really scale those -- start to scale those businesses? And I guess, some of the key initiatives you have in place to do so? So...

Definitely, we see these 2 markets as gigantic opportunities. You have more than 1 billion consumers in both. The category is underdeveloped in both. But there are 2 very different stories. If I start with China is we've been in China nearly for 10 years on what we got into China, we realized that we had to have 2 challenge we didn't have in most of the countries. One, we had to create the sparkling energy drink category. It was not existing in China, is Red Bull, Austria was not existing in China is what the energy -- the product which we were giving the energy was small traditional noncarbonated product that the Chinese are naming flavored vitamin drinks. So there was no so-called energy drinks. And all of this was noncarbonated. So bringing Monster was very different from anything they've tried before. But it was not only that challenge is well in the rest of the world, when we brought Monster to Europe is we had already some equity built from our global assets from our presence in social media, China is behind the great digital wall, okay? So the number of Chinese who heard about Monster brand would recognize a c was very small. So we had to create new category and build a brand nearly from scratch, okay? And therefore, we took the time to say who are the consumer will be open to an international brand, would be liking a carbonated drink, which is not tasting like anything else they had in China and they build it step-by-step with the bottlers. We have 2 great bottlers in China, Cocoa and Swires, and they've been very committed to the energy drink category because they've seen the opportunity in the rest of the world. And step by step, we found the right consumer with the right marketing approach, sampling our product to the right people. We are much more focusing on the Tier 1 cities instead of going to the factories is we are much more focusing on the universities where the Coke system has great access to the thousands of mega universities we have in China on stepbystep, we are building the R. So we have now -- we believe we have now built a very healthy foundation is our products are growing. Our distribution is sticking. And therefore, we are able to build on what we believe is solid because now we have built a good base for Monster, we're able to say, how do we start addressing the other opportunity, which is a noncarbonated drink. So we launched Predator in China 2 years ago, and we are learning because it's a very different consumer. It's a consumer which is not speaking in English, which is drinking noncarbonated, which is living in factories or what they name the factory villages where we were with Hilton 2 years ago in Foxcon in that plant, we have 120,000 people who are living in the plant, and that's where the traditional energy drink is big. So we are working on building Monster, where we believe we have a strong foundation and learning how to get into that more traditional factory blue-collar segment in China. And we see both as great opportunity. One, we have to create the category and the other one, we have to learn how to get share in what is already a big enough category. India is a very different story. Red Bull has been in India for a long time. We have been in India for 9 years. So people knew what energy drink was. They are following the social media, they have heard about it. But the price of a soft drink is very low in India. It's even lower than China. It's selling for INR 20, which is $0.23 for the price of a soft drink is when we launched Monster and Red Bull, we sold it at 6x the price of okay? You have 1.4 billion people. So some people can afford a Monster, but we could not go everywhere. We have to find where to go specifically to target the right consumers doing that advertising would be very inefficient. But now we have done that work, same thing, the co- converters have been great partners. We have been able to cluster India to be very segmented to say, where are the dozens of millions of people who can afford a Monster because trying to be available to people who cannot afford it is a waste of space and a waste of time. And once we did that, we said now we can complement Monster, and we created a price pack architecture, which is unique to India, where we have Monster at 6x the price of a CSD. We have predator in the can at 3x the price of a CSD because we believe there is an emerging middle class, the people who are working in all the call centers in Bangalore, all the tech part cannot afford a Monster but they can afford a predator at INR 60 -- and then over the past few years, we have been complementing that with a PET, which is still premium to CSD because we believe the functionality, the taste and lifestyle can justify a premium. And now we have this 3-tier price architecture, which is helping us to go to -- with the right product to the right consumer with the right taste with the right marketing. We have Monster, for instance, very focused on gaming, which we have seen association with people, people who can afford to spend on gaming, people who can afford to spend on a Monster can. While Creditor is going more after the people who are following cricket, but who are going to street cricket to make sure that we build a lifestyle, which is very close to what they are doing. So we have now that price pack architecture with very clear portfolio to help us unlock the opportunity of India. And again, we believe we have now a good foundation to go after that market. Very interesting.

All right. nice. We almost have almost at time, and I haven't even talked about aluminum. So I'm going to ask you the requisite question on aluminum and costs. your -- what you're seeing on that front, your confidence in being able to manage through it. And as we think about holistic kind of profitability and margins, I also love a little bit of insight, if you would, on how you think about SG&A management, SG&A leverage as we realize some of the growth we're talking about.

Okay. So let's start with the second point, SG&A management. We're very careful with the way that we operate and the way we spend, particularly on marketing dollars. Our business is focused on not on advertising in a classical sense per se, but in establishing relationships with athletes, relationships with and endorsing opportunities like Formula 1, UFC. And all of those things, they have a cost to them. There are some other ones that we've been working on that we're really excited about. The point is that we believe in our brands. We're a growth company, and we need to support the brands and marketing. So you've seen what's happened with SG&A. It's kind of, I think, been well managed up until now. And I don't see why it wouldn't be well managed going forward. And as I say, we take opportunities when we see a need. For example, with the relaunch of Storm, it's requires marketing dollars with the relaunch -- with the launch of Flat that's -- you can't just drop a product in a market and hope for the best. So there's -- the business is growing, revenues are growing. SG&A, I think, is well managed and will continue to be well managed. And then just very quickly on aluminum. So we have a very active hedging program in place in the company, and we've spoken about this on our calls. We hedge on a ladder basis, something that is -- we're involved from the top down from me to our CFO, our Deputy CFO, our Head of Treasury. We're very focused on doing the very best we can with aluminum. -- as I mentioned in the first quarter, we had a 1% hit to gross margin from aluminum. And in the U.S., we have this Midwest premium, which I still don't understand, but it's kind of expensive and goes up year-on-year. It's -- I'm kidding, but it's a difficult financial metric that we have to pay for. And so we've been able to manage aluminum in what we've called in a modest sense. And our pricing, the increased price that we took in November actually offset that increase in aluminum in the first quarter. As we go forward, we believe that will continue to be modest. And one of the reasons is that when you look at the cost of a can, aluminum is a small portion of that cost because you have the can, you have the ingot, you have the -- which is the aluminum, ingot to sheet, sheet to can. So it goes on. And because our margins are good, you don't see the same impact that you would ordinarily in a company that had lower margins. So I hope that answered the question.

It does. Sorry to end on aluminum, but we're out of time. And I thank you all for your time, and thanks for joining us, everybody.

Yes. Thank you.