The Coca-Cola Company (KO) Earnings Call Transcript & Summary

Good afternoon, everybody. I am Steve Powers, the Head of Deutsche Bank's U.S. Consumer Goods Research, and I am very excited today to welcome the Coca-Cola Company back to our conference. Joining us today from Coca-Cola are John Murphy, Chief Financial Officer; and Manolo Arroyo, Chief Marketing Officer. So John and Manolo, thanks to each of you for joining us. We really appreciate your time. Before we begin, just a logistical point for those who are listening in. [Operator Instructions] But with that, John, Manolo, thanks again for your time. Happy to see you.

Thanks.

Maybe to start with you. We spoke about a year ago at this venue, the pandemic was still fairly young. You had weathered the first few months of it well. I think you're feeling confident about the future, but there was still a tremendous amount of uncertainty. Just as you look back, retrospectively, how would you describe the progress made? What's most surprised you? And what have you most optimistic as you look forward?

Thanks, Steve, and great to be with you, even if it's virtual, not in Paris. Yes, hopefully. I would -- let me start -- I'll start by putting the year itself into context. The last year, 1.5 years, I would describe as a catalyst, actually, for many changes that we had either started or were contemplating. For example, a lot of the work that we have been doing in the digital space, I think, has accelerated over the last 9 to 12 months. In other cases, it's actually somewhat as an unlock, I think, for things that we knew we had to do, but in a normal environment, just didn't get around to doing it. So the portfolio work that we have done over the last 6 to 9 months rationalizing our brands down to just over 200, it's something that we knew we had to do probably would not have happened as efficiently as -- dare I say, as ruthlessly as it has. When I think about the progress we've made, I'm going to divide that into 2 parts. Like the scorecard we have on actions that we have taken and our already deliverable tangible results is one way to look at this. And then we have a scorecard on actions that have been taken or are underway, which, I believe, will help us on the journey over the next 2 to 3 years. So on the first one, I think the organization changes we've made have and are delivering the efficiencies that we got. But they're also allowing us, I think, to move with the speed and with the agility that we need to as an organization in the world. Not only that we're living in today, but that's coming out as fast. I think we were pretty quick in the course of last year to make sure that our balance sheet was strong enough to withstand different futures ahead of us. And I feel good about where we are and how well we're positioned to manage both this year and, indeed, the future we see in '22 and beyond. There's a number of actions in motion. The -- I alluded to the portfolio optimization. I think in the short term, that's allowing our system to focus on the big value levers that are relevant for this period. But more importantly, it's positioning us well, I think, to be able to emerge stronger as we see light at the end of the tunnel in many parts of the world. In terms of what surprised me the most, I guess there's 2 parts. One externally, things that are not really in our control, but the degree to fix the developed world has managed before, during and now in the vaccination phase, has been surprising in the sense that there are so many extremes. Like if you take countries like Australia, Germany, United States, Sweden, the U.K., Singapore, to name a few countries that I would put in the developed world bucket, and the different approaches that they have all taken in this past 1.5 years, I guess, going into something like this, I would have expected the dispersion to being a lot narrower. And yet it's vastly different. And that has had, I think, consequences and implications for all of us as we've tried to navigate through it. On the -- on the plus side of what has surprised me the most is the ease -- the relative ease with which not only ourselves, but I think other companies have adapted to the virtual world. It's not that it's a perfect world, but it's one where I think we've, to our surprise, have gotten maybe a lot more done and a lot more done more efficiently and effectively than we would ever have thought if somebody had told us 18 months ago, "This is how your world is going to be for the next 18." And with regard to optimism, I think our company is built on a bedrock of optimism. I think the belief within our system that the path we are on, we have been on for the last 3 to 4 years, is perhaps stronger than ever. I think the work we did over the last couple of years on purpose is a big part of that, is reinforcing the reason that we do exist and living up to that. And at the same time, coming through the last 18 months with the resilience that our system has shown, I think, has given us maybe a sharper edge as we look forward to competing and to winning in the markets that we are in around the world. So looking forward very much to the next 18 months and being able to demonstrate that.

Are you surprised at all with how -- I guess, from my perspective, how strongly the system -- how quickly the system came together and rallied around the crisis in those early months and really over the last year? It just seems like it was a very coherent, I don't want to say coordinated, because it's not that simple. But it just seems like a very, sort of, uniform, "all for one, one for all," type of response that I don't think was necessarily guaranteed coming in. So did that surprise you in retrospect, if you -- assuming you agree with my characterization? Or actually, is nothing you expected?

I wasn't totally surprised, to be honest with you. See, I think the -- like any major crisis one enters into, your state of being going into it is a pretty, a pretty -- it's a good indicator as to how well you will manage through it. And I think we have been fortunate under, James' leadership, under Brian's leadership, with also the quality of leadership we have running our bottlers around the world to have had a pretty aligned view on the overall path that we were undertaking, becoming a total beverage company and doing this in a thoughtful manner with our partners. I think a lot of the work we've done in the last few years to align on the key metrics going from volume-centric revenue and profit centric has been a big help. And so as we entered into the pandemic, I think the degree to which we were able to coalesce and land on a common blueprint to manage through this was easier to arrive at, given just the quality and the depth of both not just the relationships, but the economic models, the agreements, the approaches that we were taking anyway in our markets around the world.

Yes, yes. Okay. Manolo, I guess it's now been a little bit more than a year since you took over as Chief Marketing Officer. And I don't think, coming in, you said you expected to start your role amidst the onset of a pandemic. But as you think about your role, just -- what were some of your -- I guess, what were your biggest priorities coming in for the marketing function? Have they changed at all in light of what we've all experienced for the past year? And regardless whatever the priorities are now, like, why are they the right ones? Why should investors see them as the right ones?

Yes. I mean, no one would imagine what we were going to get into, but -- especially just literally 30 days, even less so into the role. But when I took over as a CMO, there were a few objectives that I wanted to happen in the marketing organization to focus on. First and foremost, it's all about human centricity in absolutely everything we do. Second, I think early on, we tackled one of the fundamental challenges we were having in the organization, which was the lack of clarity of what is the metric -- what the metrics, the critical metrics that would make the marketing teams accountable for. And we decided to put everything in just -- the whole focus on one thing, which is about recruitment. So the name of the game is not about perception only. It's not about winning advertising awards at Cannes. Obviously, quality of marketing is absolutely critical, but what is much more important for us is ensuring that we truly drive consumer behavior. Now what it means in our business is moving people that do not drink our beverages into becoming at least people that drink, once a week, any of our brands in our portfolio. And that is the one single metric that all of our marketeers are now accountable for. And moving forward, this will be the case, not only across the world, but for each and every one of the categories. I guess another one of the important objectives was ensuring that we don't compromise on superior taste in products. At times, driven by timing commitments with customers, with our own bottle -- bottling system, we've done some compromising on tasting. And that -- we know that there's no marketing that can compensate for a lack of a winning superior tasting product. Aligned with that then, ensuring that we have the right pack size and the right price point and margin structure to ensure that everything that we drive in marketing is accretive to our business. More importantly 2 additional components, one is we come from a world in which it was all about TV, TV-centric -- traditional TV centric, where you were interrupting the consumer, because you have -- we had them completely captive, and that has changed completely with the explosion of digital and mobile. So the power has shifted from the companies like ours into the consumer that decides when, what to consume or not at what time of the day, in what format, et cetera, et cetera. So we got up, we shift, completely, the focus from us into the consumer first, particularly in the way we engage with them. And finally, the innovation. Innovation I think we've been pretty active in innovation with different degrees of success, some great achievements in some areas, but some significant failures in others. And innovation has to be -- it will be one and significant important growth driver moving forward for our organization. Then in line with what John mentioned, my top 3 priorities to achieve those objectives were: first portfolio optimization; the second one was about showing that our marketing investment efficiency and effectiveness was much higher than what it was in the past; and third, a shift in innovation. When it comes to portfolio optimization, our long-term profitable growth will be driven by an optimized brand portfolio with its streamline, as you all know, from 400 to 200 master brands, allowing the global category teams to identify the biggest and greatest opportunities, combining category and country and geographical combinations and allocated investments accordingly into a portfolio that has 2 important dimensions: one is a well-balanced portfolio between global and regional, and continental and large-scale local brands; and second, that these targeted investments will leverage our leader brands more effectively and convert more challenges and more explorer brands into leaders faster and consistently. Additionally, our portfolio is streamlined and will allow us to focus much more attention and resources on what we do best, which is brand building and innovation. Moving into marketing effectiveness and efficiency and innovation. In our human-centric marketing the pandemic had us thinking very differently about our marketing activities. And the marketing framework that was laid out at CAGNY with the consumer at the center, it reminded that very well. The new marketing model starts with human insights and then focus on superior taste -- tasting products. We are stepping up our game in innovation, as I mentioned. We'll talk about that in -- down the road. Then it's critical when it comes to brand bundle and engagement. We've gone -- we've undergone a marked acceleration of our own marketing revolution in terms of capabilities. In the last couple of years, we've hired a significant amount of new people, very specifically, 40% -- almost 40% of our organization is new, joining the last 24 months or less, developing new age capabilities, whether in-house or with our partners; important fields like our audience profiling, data management, CRM, digital commercial activation, e-commerce, et cetera. And we're leveraging our network to be much more agile and flexible, experiment much more aggressively, test and learn, pivot quickly and scale the winners much faster than in the past. Examples of that, of the new marketing way, our new way of marketing is "This Coke Is On Us," campaign in Europe; our Minute Maid, we launched in China; or the Cold One platform, vending platform in Japan. For us, as I mentioned, the highest return on investment in marketing is that -- is the one that drives not only brand off, but drives consumers into actual real behavior that accounts for real cases and real revenue for us. And it's all driven by the other things that we outlined at CAGNY, a superior product, in the right location, the right price, the right pack, engaging the consumer with the right passion points at the right time.

Great. Thank you very much. John, maybe I got a question from the audience. I've been hit on e-mail and chat with sort of questions that evolves around the sort of the pacing of recovery and kind of where we are. And I think most of it is through the lens of away-from-home, immediate consumption. Is there a way to just -- to kind of frame for us where we are in the path to and towards the new normal, maybe index to 2019 or however you want to do it. But just -- is there a way to give folks a sense of where we stand today on the road to recovery amidst what I think many of us see and hope is the beginning of a wave of reopening?

Yes, I wish it was as sort of simple as just being able to say we're at different points of the same journey, but the reality is it wasn't. In the Q1 call, we talked about the famous word that we've used, the asynchronous nature of getting through this pandemic. And the reality is it's still somewhat playing out that way. I think it's important to look at the degree to which vaccination is happening at the speed at which it's happening in different markets around the world. Because I think it's the best connector to the biggest variable in the equation that we've been managing and that's mobility, people's ability to move around. And so the world is still moving differently on their respective paths. And clearly, we can see the United States having accelerated significantly. I think I saw a stat the other day that the rate of COVID cases is 96% down since January, which is tremendous. We have a market like China, which is -- I wouldn't say 100% recovered, but it's well ahead of the curve. And yes, we see in Europe, we've got progress but at different paces, different rates. And then to develop -- I think the developing world, come back to my -- what surprised me about the developed world, what has not surprised me about the developing world is just the way in which it's been managed, almost as another boulder to throw onto your back. The -- when you operate in markets where people live on a daily wage, you can and should expect those economies to try and muddle through. And I think we're seeing that in many parts of the developing world with very different consequences. So I would expect us to continue to see that asynchronous recovery. The developed world overall, I think, is on -- despite my comments on how they've managed it differently, it's starting to, I think, merge towards a path to recovery faster. Whereas I think we'll still see, rest of this year and even into parts of '22, some of the developing world markets lagging behind.

Great. Last August, I would say you began -- I think the journey began earlier, but you announced sort of the formal progression towards what you've done in a networked organization, and Manolo referenced this. Maybe, John, just -- where are you in that progression towards sort of the network organizational ideal that you aspire to? What dividends paid or lessons learned have you accrued so far? And then Manolo, I'd love your perspective as well as to how that's influenced your world, right? And then any tangible benefits that you've been able to glean. I think you referenced that 40% of your team is new. And I'm curious as to how as new people and new roles amidst the new organizational structure in a remote world, how that's fared? But maybe we start with John.

Sure. So the word network, I think, is interesting on many fronts. And maybe start with a little context on the network. Like we operate a global network with our bottling partners. We have a presence in 200 countries plus. We now have a brand portfolio of 200-plus brands, 225 bottlers, give or take, that operate over almost 1,000 plants, over 700,000 people that service 30 million customers and almost 2 billion served. So it's a massive network that has been built. As you know, Steve, over many, many years, like, I could maybe divide our history into almost 3 parts. The first 60 -- the first 1/3, first 60, 65 years has been all around the building of brand Coca-Cola U.S.-centric with some forays overseas. The next 60 becoming a global company, primarily focused on our core sparkling business. And then we're on a path now to becoming a total beverage company. And I think, as you said before the crisis started, we recognized that we were approaching -- just another inflection point in how we organize ourselves, what capabilities we need and how we need to compete in order to deliver on our ambitions to be a top quartile performer. And so the new model is -- think of it as an opportunity to retool for this next wave of growth and development. And within that model, there's a few really important components. One is the notion that we should scale where it makes sense and yet stay intimate where it makes sense. The latter being super important because we -- our model is built on winning locally. And we believe that it should stay that way for some time in many years to come. And so that's been of help. But at the same time, over time, a lot of services, a lot of work gets done locally that doesn't need to be there locally, particularly with the advent of technology, with the important role that data plays in being competitive. And so we have reestablished our operating units with very clear job descriptions to win locally. We have -- as Manolo will talk in a moment or has already talked about, we are stepping up, raising the bar in what we expect from the marketing and innovation teams, both globally and working in a networked fashion. We formed almost a company called Platform Services, which has got a number of pillars in it. But central to all of them is the notion of having a data platforms that will service the needs of the business in a much more efficient and effective manner as we go forward. And then finally, there's an orchestration piece. Like to -- for a network to operate effectively, it's got to have a very strong nervous system that allows you to orchestrate, that has the various pieces move, and we're very much underway. We've got the new organization in place. We've established, I think, an excellent set of routines within the various units that we now have. And it's already starting to pay dividends. The speed at which we're pivoting through the pandemic, I don't think would have been possible without this approach. The enterprise mindset that we've shifted our incentive scheme this year to be heavily skewed towards winning for the company overall. So that is allowing and forcing -- allowing and forcing both our operators to think more holistically on what does it take to win as a company. I've talked about the alignment that we have with our bottling partners. I think it's been strengthened greatly as a result of these changes. And I also think there's also a need in organizations like ours -- as large as ours, to make sure that we've got the right tension in place. So the creation of category leads empowered to drive what's right for their categories, working in partnership with operating units. And yet, maintaining the operating units as the profit centers of the company is creating, I think, a constructive tension that is delivering some good results. On the finance end, if I can talk a little bit about my own specific world. We've, I think, made great strides in the last 12 to 18 months, completely changing the way we think about what finance needs to deliver. 600 of the 1,200 people we have around the world changed jobs on January 1 to be part of a one organization that will be providing a stepped-up self-services to the rest of the organization. We have, on areas like working capital, made tremendous strides and we'll continue to do so as a result of this new model. I think one last comment on -- you've asked on the lessons learned. I think the clarity of purpose that I alluded to earlier is super important, really important for the organization to have a consistent rallying cry. And I think our simple reason to be in -- to refresh the world and yet make a difference was never been more important as it has been for the last 12 to 18 months. I think it's important to -- the best time to prepare for a crisis is before you enter into it. I think that's a great lesson to learn and take forward not to get lackadaisical. And I think the last point that I would offer is that it's not just a marathon where you want to be playing top of the leagues. It's more like an Olympic marathon, and you've got to build the stamina over time to be able to perform at that level. And I think that's been a big learning for all of us.

Okay. Manolo, just -- I mean, building on that and making it relevant to your well, just -- and your objectives, how has the -- some of the organizational change that's come about over the last plus year at this point, helps you become nimbler and yet at the same time, more collaborative to meet the objectives you outlined earlier?

So like the rest of the company, the marketing team has undergone a very significant transformation. We're coming, in essence, on very different design -- structural designs in each of the prior 20 business units around the world. So under the new construct, we have created the global category leads with very clear decision rights to modernize our approach to marketing and innovation. They drive what we call the creation marketing funds. Then we have, in each of the 9 operating units, marketing teams whose structure mirrors the whole structure, and which are collaborating with the global teams on crafting and co-creating the global brand growth strategy and provide input on key marketing decisions, along with setting the growth strategy for both regional and local brands. So previously, we had the marketing execution and the marketing strategy teams separate. But now the teams are structured to build a holistic skill set. And then to John's prior comment one of the biggest changes is the creation of Platform Services, which has its own marketing power to elevate and accelerate data analytics and insights capabilities to accelerate its top line and bottom line growth. This will reduce duplication, will drive scale. So we already have some great examples of this new way of working within the company and with our bottling partners. So for example, how does it make us nimbler? If you take Topo Chico Hard Seltzer, for example, the strategic space of hard seltzer was first identified and will leverage the consumer testing to identify even spaces to go after. And working with a global cross-functional team, we developed concepts and products very quickly, actually 6 weeks of product development time, whereby in the past, in the prior model, we would take anywhere between 6 to 9 months and launch it the very first market. Simultaneously, we got ourselves ready to scale very quickly in more countries. So far, we are in 16 markets and counting probably going to be in an amount close to double that amount at the end of the year. We're really excited about this. I'm very optimistic about this opportunity as the category rapidly expands globally. Another example of how we are adapting much faster is, for example, AHA. AHA, for those of you that may not know it, is a brand that we launched first in the U.S. to fight against Bubly and LaCroix in 2019. So it is all developed only by the North America team for North America in mind. However, the new global category team structure very quickly identified it as a brand that has legs. And we believe that it can be scaled in many geographies, and we have quickly adopted it for Europe and China, where we're launching as we speak. And it's performing really well. And in velocity, growth continues to outperform Bubly, clearly. It's outperformed all the category benchmarks across key metrics like brand love, taste preference and repeat purchase. And in the U.S., it continues to grow through disruptive and continuous marketing pressure. Another example of being much faster to pivot, under the new model is Coke Energy, for example. The recent decision to discontinue Coke Energy in the U.S., epitomizes the new culture, the ability of our system to pivot and the commitment of taking risks and failing fast, applying the learnings and resources elsewhere. Despite the strong launch with the Super Bowl last year and a solid media plan, after analyzing in detail the data, we clearly saw that the brand was not resonating with the consumer. This was not where we needed to be, and we saw that the traditional Coke consumer wasn't really orientated that much again towards this energy offering. So when things -- when faced with the choice, either redouble our efforts or discontinue and reassess with an interactive solution to deliver on the upliftment real estate, we made a much more disciplined decision. And the easier thing to do would be just -- in such a situation in the past model, in the prior setup, will be just to put a little bit of a marketing investment behind the brand, I'll let it continue. Because we were kind of -- we all had our pet projects, our small babies, if I can call it. We were not decisive enough in getting -- moving out of our way. So this new network organization, at the end of the day, is going to focus on one thing that matters, which is really driving the resources to the areas, the opportunities, the consumer-centric growth opportunities that really matter, that drive the highest ROI for our system.

Great. Thank you. And I mean, that leads me to -- John, there's been a tremendous focus on efficiency and cost savings and emerging more profitably post pandemic, kind of leveraging some of the efficiencies that you gained, frankly, over the last year. But you've spoken and Manolo just alluded to the desire also to invest behind growth opportunities, invest ahead of growth opportunities once recovery and social mobility conditions allow in any given market. So how should investors on the outside interpret the relative priorities and objectives in terms of just, for lack of a better word, banking those productivity benefits, but also proactively investing so that you don't squander future growth?

Yes. Super important topic. First of all, I said the 2 areas are not incompatible. I think it's incumbent upon companies to have and to continue to bring great discipline to how we manage costs, whether they're marketing, operating or in the supply chain area. And that is something that we are very committed to doing. I think it's important that you have the -- sometimes the humility to look at how you do versus others, but then the ambition to ultimately do better than them. I guess that's -- if I were to summarize the approach that we have on costs, it would be exactly that. We brought in some people from outside and supply chain in marketing and, indeed, running the business. And it's impressive what you can learn. But it's also -- there's lots of data out there that gives us a sense as to where we are, and an ambition then to do -- ultimately, to maybe be the benchmark. On the marketing piece, it's a terrific -- I think it's a terrific moment for us to, again, use this period that we're in to almost re-base everything that we do. And what I mean by that is that Manolo and I have been working hand-in-glove, over the last year or so, to tackle the significant spend that we have, first of all, as a company, and then secondly, as a system to engage with our consumers and customers. And there's a couple of things that we know for sure. First of all, we know we can do what we have been doing historically for less, for a lot less. We know that there's a lot of efficiency out there. We alluded to it at CAGNY. We've got tremendous momentum underway in a number of the buckets of spend that we have. And it's important that we clean that up and feel good about the efficiency of the spend. But as Manolo is speaking on a number of fronts, we also know we can do it better. And if you take the engagement with people today through mobile devices, there's a lot of guessing out there as to how to do it well. And we need -- we know we need to step up significantly to get a better return of the investments that will be required in that area as we go forward. And I think the third lens I look at is I know we can do it smarter. And what I mean by that is that like in your world, managing your portfolio requires you to, I think, have the agility and the flex when you need it to put your resources against the highest priority areas, be that a geography, be that a category, be that a channel. And so I think this work is allowing us to have that flexibility. It's already paying dividends. We -- at the end of the first quarter this year, when we saw some of the trends positive and some headwinds, we've been able to redirect resources a lot faster than we have been historically to make sure that the markets that need the support and the oomph that's appropriate to get them. And in some cases, markets that are struggling also get what is important for them. So I feel good, Steve, as to where we are. But I think one of the watch outs for all of us is as we move back to a normal world is that we don't let the bar slip, and we say -- we keep the same tension in place as we have when we're managing through a crisis like we have been.

Okay. Understood. We have about just under 5 minutes left, so I want to make sure we hit the 2 topics that have come in as well in question -- or in the form of questions. The first one is just an update on just the U.S. tax court's opinion from November and your preparations against it, noting that I think your team filed a motion to reconsider that decision last week. Just any update in terms of what the process and time line is in the background there would be helpful? And then the second topic is around -- just the topic of, I think, of the conference is just the inflationary backdrop that the world is experiencing. I'm curious as to how that's impacted your business, but also the system at large? And how you and your bottling partners are managing through that from a revenue growth management perspective? And Manolo, to the extent we've got time for you to weigh on that, too, that would be great. So I'll just -- I'll throw it over to you guys, and you can handle however you want.

Okay. Well, let me -- then, I guess, I'm the one to take the tax question, unless Manolo wants to, which I doubt he does. But -- so on the tax topic, as we have outlined in previous conversations, we know that the initial judgment went against us. Notwithstanding that, we believe we have a very strong case to make. And we have assembled what I would consider a world-class team to support us on the journey forward. One of the first steps in that journey has been what you just referred to the filing of a motion for reconsideration, which is a piece of the process as we move forward. We don't have clarity yet on a time line as to when a final decision will be rendered in the tax court. Regardless of that decision, I would expect that we will go to appeal, whether it's us or the IRS moving to appeal. That is -- that's pretty much a forgone conclusion. And the appeal process takes its own time. I don't have a good time line on that either. And then beyond the appeal, in the Federal Court of Appeals, there is a recourse for both sides to go to the Supreme Court. So we expect this to be a journey of many steps. And we are actively engaged with this tremendous team we have in place to manage that as we go forward and to take into account the various milestones that will come our way. On the cost front, it's not so much the cost. But on the inflation front, for sure, it's a topic that's, I think, on everybody's minds as to what is the journey ahead over, not just for this year but into '22 and even beyond. And I think we had some calls earlier today, I don't think there's a lot of clarity as to whether we have a spike in the curve or whether there's something more enduring beyond that. But in the -- what we do know is, and we know historically that when you have inflation, it's important to ride with it. It's important that you manage your pricing algorithms in a way that you don't lag behind, because it's very difficult to catch up afterwards. And I think that's -- our bottling partners know that better than we do, and I think are managing it very well. But it's not as just a straightforward that you have to still stay connected to your consumer base. And you have to stay competitive with whatever market you're in. So that's where RGM comes into play. And constructing the right price pack architectures to not lag behind inflation on the pricing front, but to stay competitive and to stay affordable is the game we're playing at the moment. And I'm confident with the capabilities that we've built and the alignment we have, that we will be effective in that regard. And on the cost front, we've been -- we're pretty well hedged as we've talked for the rest of this year on the key commodities, some hedging going into next year. But it is an area that is top of mind, I know, for all of us, given just there's some uncertainty as to how long it's going to last. And we're very focused on taking steps that we need to mitigate against some of these commodities getting out of whack.

Yes. Manolo, I don't know if you have any thoughts you want to add to that. We are closing on the time, but I just -- I will give you the opportunity.

Sure. I would build on what John mentioned around RGM. I think the way we think about pricing in the context of this pandemic is without about -- in every -- in any given kind of scenic post pandemic, a portion of the population that is going to spend much more in general, including beverages, and another portion of the population that is actually going to become much more prudent in their spending levels after feeling certain pains during the pandemic. So for us, to John's point, it would not be wise to at least aspire to capture whatever is the inflation in any of the market. And I think the key word there is segmented, or segmentation, which is equal to be very balanced of how you go about it. In every market, as a consequence of the pandemic, you're going to have opportunities for premiumization and also opportunities to deliver better and more affordability for certain segments of the consumers or the shoppers. So at the end of the day, when we have the RGM framework in a lot of -- and I haven't had the opportunity to work for other companies, I think our system, like Coca-Cola, fondly speaking, when it comes to RGM, is in a whole different league, a whole different league. So you not only have line pricing, you also have significant opportunity to optimize discounting levels through promotions. The famous gross-to-net that all our bottlers have, how much of that is conditional or is not conditional to execution. Then you have the classical play in the mix, mix of categories and mix of brands with different price increase opportunities in the system, different channels and customers offer us and we'll really leverage that very well. And then finally, packaging, sizing and price points within the overarching part of our packaging architecture for any given brand. So we have tremendous amount of levers. And I think what's most important is that the levels, the skill set that, as John mentioned, the system has been stepping up the capability on this front, both on the company and on the bottling side for the last 4 or 5 years. So it actually -- this pandemic has got us best equipped and prepared and ready than ever before to really capture those pricing opportunities forward.

I think it's a great place to leave it. Thank you, John and Manolo. I think at the beginning, I said good morning and good afternoon. I forgot to say good evening to Manolo who is calling out from Singapore. So thank you both for your time. Thanks, The Coca-Cola Company, for your participation, and thanks, everybody, for listening. I wish everybody a great event. Thank you.

Thank you, Steve. Thank you.

Thank you.