Hello. And thank you for standing by. We would like to welcome everyone to today’s Coca-Cola Europacific Partners H1 2021 Conference Call. All attendee lines have been muted to avoid any background noise. After the speakers’ remarks, we will have a question-and-answer session. It’s now my pleasure to hand today’s conference over to Vice President of Investor Relations, Sarah Willett. Ma’am, I give it to you.

Thank you all for joining us today. I’m here with Damian Gammell, our CEO, and Nik Jhangiani, our CFO. Before we begin with our opening remarks on our results for the second quarter and half year 2021, a reminder of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in today’s release, as well as the detailed cautionary statements found in reports filed with the UK, U.S., Dutch, and Spanish authorities. A copy of this information is available on our website, www.cocacolaep.com. Prepared remarks will be made by Damian and Nik and accompanied by a slide deck. We will then turn the call over to your questions. Many of the metrics presented today will be on a pro forma basis. These reflect the results of CCEP and our Australian, Pacific & Indonesian business unit, API, as if the Coca-Cola Amatil transaction had occurred at the beginning of this year. Comparable measures reflect the timing impact of the Amatil deal, which completed in May. The slides and our prepared remarks will distinguish between these two methodologies accordingly. Following the call, a full transcript will be made available as soon as possible on our website. I will now turn the call over to our CEO, Damian.

Thank you, Sarah, and many thanks to everyone joining us today. Let’s start with our half one key takeaways. A strong performance delivered by highly engaged colleagues, in quite a dynamic environment. So to all my colleagues, I am sincerely grateful for the hard work and commitment that you’ve all shown to CCEP and continue to show as we close out 2021. We are again the number one FMCG customer value creator in Western Europe. And I’m very pleased to say that we continue to win market share both in-store and online across the NARTD category. Critically, we are continuing to accelerate our investments across two key areas, our sustainability agenda, alongside our on-going digital transformation. And I’m very pleased that the integration of API is well underway and we are working on joint growth plans with The Coca-Cola Company as we look forward to an even more exciting 2022. We have a simple but vital purpose as we move forward as Coca-Cola Europacific Partners to refresh Europe, the Pacific and Indonesia and critically to make a difference for all our communities and our stakeholders. We do believe in a bright future for our business, led by our aspiration to be the world’s most digitized Coca-Cola bottler, and as I mentioned earlier, our strong commitment to delivering on our ambitious sustainability agenda. We have a solid track record of delivery and execution, and I’m very pleased we do retain our number 1 position as customer value creator in Western Europe. We are fortunate to operate in a highly attractive, valuable and growing category. With our exciting portfolio of brands, products and packaging, we enjoy scale and a leading position across all our geographies. We also have a great opportunity to continue to unlock the potential of our newly acquired business…

Thank you, Damian and thank you all for joining us today. Let me start with our half one financial summary. I will touch on these now and go through some more detail shortly on each of these areas. So starting with our pro forma revenue at €7 billion, that’s an increase of 11.5% on an FX-neutral basis. And our pro forma COGS overall was up 10% and on a per unit case increased by 1.5% on a pro forma, comparable and FX-neutral basis. We delivered pro forma comparable operating profit of €802 million, up nearly 60% on an FX-neutral basis, reflecting the growth in our revenues and the benefit of our ongoing efficiency programs and our continuous efforts on managing the discretionary spend areas closely. Our comparable effective tax rate declined to 21% from 24% last year when calculated on a similar basis. The reduction is driven by the utilization of previously unrecognized losses and reassessment of our uncertain tax positions. This resulted in comparable diluted earnings per share of €1.09, up 87.5% on a comparable and FX-neutral basis. Free cash flow generation continues to be a core priority for us, and we generated strong free cash flow of approximately €650 million on a comparable basis. Now looking at the pro forma revenue highlights. The increase was driven by both an increase in volume and importantly our revenue per unit case. As mentioned earlier by Damian, we’re encouraged by our volume performance in Q2 as we lapped the worst impacted period from last year. Revenue per unit case grew by 3% versus 2020, reflecting positive pack and channel mix following the reopenings in the away-from-home channel, positive brand mix and favorable underlying rate increases. And encouragingly, we’re up 0.5% versus 2019, despite the mix headwinds. Unsurprisingly, the most significant improvement…

Thank you, Nik. Just now to touch on the very exciting Amatil transaction. As a reminder from our investor event, we truly believe that this transaction is a great move, and it happened at the right time. The recent news of New Zealand being crowned champions of the 2020 Candler Cup, an annual global Coca-Cola system bottler competition, is a great example of us acquiring a business with momentum and a business which we can learn from in Europe. The tangible top and bottom line growth story, combination benefits and best practice sharing, as well as an even stronger relationship with the Coca-Cola Company and our other brand partners are all reasons that this transaction will create significant value for all of our stakeholders. It is indeed a really exciting opportunity for all of us at CCEP. On the integration, we are well underway and I am extremely pleased with the progress we have made in the first 100 days. We have key talent in place, including Jorge, our new GM of Indonesia and Papua New Guinea, who recently joined us from one of the Mexican Coca-Cola bottlers. Jorge has extensive emerging market experience and is a great addition to our team. From a digital perspective we have started on the journey to bring our people together, systems and processes to allow us to collaborate and operate as one across multiple timezones. We are already sharing learnings and best practices and one example of this is the excellent use of analytics that the Australian business has been doing for a number of years. And as Nik mentioned earlier, we are making progress on our efficiency programs and the combination benefits we are committed to deliver. We have also been simplifying ways of working, such as acquiring the minority interest in…

Thank you. And our first question today is going to come from the line of Bonnie Herzog, Goldman Sachs.

Thank you. Hi, Damian and Nik. I was hoping to get some color on your recent pricing actions and how these have been received in your markets? I guess, in general, have retailers been accepting? And are you finding that you’re your pricing actions have been sticking? And then finally, how are you guys thinking about pricing in the balance of the year? And how aggressive do you think you might need to be to potentially offset some of the inflationary pressures certainly that you’re seeing, or maybe touch on what other levers you can pull to offset some of these pressures? Thank you.

Hi Bonnie. Yes, we’re -- on pricing for ‘21, as you know, I mean, most of that really was concluded at the end of 2020 and into the first quarter this year as we finalized our kind of broader customer agreements. So clearly, we are happy with the level of pricing we’re seeing in ‘21, and that’s definitely supporting a very strong first half of the year, and we’ll continue to support our performance into the second half of the year. We’ve also been, I think, really starting to benefit from some of the investments we’ve been making back since ‘18 and ‘19 around the revenue growth management strategy and tools. I suppose one of the metrics that I’m particularly happy with is that our revenue per case is ahead of ‘19 this year, which I think is a phenomenal achievement, given some of the mix headwinds from a channel perspective we’ve enjoyed. So, I think we are getting the pricing. We are managing it smarter toward the end. And clearly, as we look through the second half of this year and into ‘22, that’s going to become a capability that we’re going to need to use even more to offset some of the headwinds that Nik alluded to around some of the commodities and ultimate cost pressure. We’re having those conversations already. I mean, this is not being new to anybody. So, we’re engaging with our customers to look at our pricing plan for ‘22. They will be, as in other years, finalize more towards the end of the calendar year and into the first quarter, and we’ll obviously be updating everybody on how they’re progressing. Well, obviously, it’s going to be a different type of pricing environment when you look at some of the headwinds at our sales or competitors. And let’s not forget, our customers in Europe are also big suppliers in their own right. So, these headwinds are really being felt by everybody. So, from that perspective, we’re confident that we’re going to be able to navigate those challenges. We see them more shorter term in nature. So, we are not going to do anything that would jeopardize the long-term health of our category of our brands. But ultimately, accommodate the price mix for ‘22 will be what we need to offset those headwinds, particularly near. But we’re already working on that, and as I said, engaging with our customers. So for ‘21, very happy, particularly happy with our net revenue per case performance. For ‘22, great line of sight and visibility on the challenge, which always helps, and critically good capabilities inside CCEP now to make sure we can pass on that pricing in a sustainable way, so we don’t do any long-term damage to the health of our brands and to our consumers. So, that’s how we’re looking at pricing at the moment. And clearly, we’ll update as we get into those subscriptions at the end of this year and into Q1 ‘22.

Our next question is going to come from the line of Eric Serotta with Evercore ISI.

Could you address any of the supply constraints that you’re seeing across Europe or any of your markets more broadly? Is it impacting your cost of goods more, or are you seeing any topline impact from supply constraints on the can side or the logistics side?

Hi, Eric. Yes, we’ve had, again, in line with the industry, some interesting challenges in ‘21. And I suppose, the broader one has been around some pressures on aluminum and can supply. I think our supply chain team has done a really good job sourcing cans to minimize our out of stocks. Our customer service levels remain in the high-90s. So, it hasn’t really impacted our top-line performance and our customer service levels, and that’s been critical for us to maintain that. We’ve had some unique situations in the UK where I’m sure you’ve read, there is some haulage shortages. So, we’re working with our customers to minimize the impact of the haulage shortage. And again, we’re looking at innovative ways to mitigate that as we go into ‘22, using different transport solutions. We’ve had a couple of one-offs in Germany and in Belgium around flooding and a couple of water plants, but again, relatively small in the total mix of our business. So, it has been a challenge, but I have to say, when I look at the service levels that we’ve been able to sustain, our team has done a great job mitigating that. And I’ll just pass over to Nik in terms of the impact it had on our products.

Yes. And I think as we’ve highlighted, clearly, some of those challenges are going through in terms of outlook for half two in terms of COGS and mainly coming from can supply shortages and then also just the pricing of aluminum spot prices significantly higher than what we had forecasted. So, that’s been factored into the COGS guidance, but more importantly then into our overall guidance. And then, we are seeing some OpEx pressures in some of the markets, as Damian just alluded to, GB in particular, with some labor and haulage issues. But again, that’s all been factored into our thinking for 2021. And Damian just talked about the type of actions that we’ll be taking for 2022 to protect the business longer term.

Great. And then, a quick follow-up. In terms of Australia, I know no transactions have been announced yet, but could you provide us any update on your big picture, thinking about the portfolio cleanup work that you had alluded to needs to be done there? Where are you in the process? Where are you in the evaluation of the process? Any update or high-level color you could provide would be helpful.

Yes. That work is ongoing, Eric. It’s something that we identified early on in the transaction has been a source of value for the system, both for us and the Coke company to align our brand portfolio a lot better. So, since we’ve concluded the transaction, we’ve been working with Peter West and the team and the Coke company in Australia to really set out a medium to long-term view of the category. That work is now concluded. And then, we’re now just finalizing within that landscape what other brands that we believe we need to win and create value over the next three to five years. And that work is where we’re at, at the moment. And then, clearly, that will lead to some decisions around brand ownership and the timing of the portfolio. And maybe, Nik, you want to comment on the timing of that piece.

Yes. So, as Damian said, we’re working through that and we’re looking at what we might do with our brand partner, in particular, with Coca-Cola when we look at some of the portfolios choices for water and flavors, as we’ve alluded to. And then we’re spending some time also assessing what is the right longer-term profile of some of the other categories such as coffee, beer, cider, et cetera. So, we’re working through that. So, I think we’ll be able to give you an update, hopefully, towards the end of the year, but all very much on track and on target with our plans.

I think, the good news on that, Eric, as well is it’s really confirmed a lot of our pre-deal assumptions and our ideas. So, we’re very happy with that as well. Thank you.

Our next question is going to come from the line of Sanjeet Aujla with Credit Suisse.

A couple of questions from me, please. Firstly, I guess, one for Nik on the commodity cost outlook into 2022. Is it reasonable to interpret that mid to high single-digit guidance on commodities as a sort of 1.5 to 2.5 COGS per unit case impact, or should I be assuming some mix impact on top of that? And then, just on the tax rate guidance going up slightly 21% to 22% next year, is that a reasonable range to think about more medium term? And are there any cash tax implications we should be factoring in above and beyond that P&L tax rate? Thank you.

Hey Sanjeet. On the commodities guidance, right now, obviously, we’re working through various elements on overall COGS. So, it can be a little premature, but as I said -- as you’re aware, the overall profile of our COGS mix post the acquisition still remains largely similar. So, you’re looking at about 25% of overall COGS being the commodities piece. Now clearly, as Damian alluded to, we will be looking at pricing, which clearly had an impact on concentrate, in line with our incidence module, and then, two other factors. I think recovery will continue and volumes will come back, which will support us on the manufacturing side. And then clearly, I think mix should be a net positive. Obviously, that will have a COGS impact depending on the revenue mix implications as well. So, early days to give you overall COGS guidance, but we completely look at trends of what we’ve seen in years ‘18, ‘19 and be able to assess some initial estimates based on that commodities guidance. In relation to the tax question, obviously, clearly, we continue to look at this in terms of what does that medium-term impact look like. I think from an angle of ‘22, we’ve given some range. I think that should be doable in ‘23 as well. Remember, the one main factor we need to keep in mind is, are there any statutory rate changes that can continue to come about. Today, the only one that we know about is, what is planned for the UK in that move in ‘23 and ‘24. But potentially, that might be reassessed as well. So, we’ll continue to keep you updated on that. But at least for the next couple of years, absent rate changes, we see that 21% to 22% being sustainable.

Got it. And just on cash tax, should that differ from income P&L tax?

Well, the cash tax piece will continue to defer, but you won’t -- in the past, we’ve seen a bigger delta between the effective and the cash tax rate. You will see that delta narrow. So, I don’t think you’ll see as much of an impact on the cash tax piece. But, that’s in line with what we’ve been having in the past.

Our next question is going to come from the line of Edward Mundy with Jefferies.

Two questions, please. The first is on your guidance for the full year, and I appreciate it’s really difficult to guide in the world still so fluid and no one’s got a crystal ball. But are you making any specific assumptions around the COVID situation within the guide? For instance, do you think -- or do you assume that things improve in API into Q4? And do you assume that things deteriorate in Europe into Q4 with the flu season? And then, the second is on the €350 million to €395 million of savings. Are you able to update us on sort of how much is done? And any more color on the phasing for the remainder of this year and also into next year?

Yes. I mean, on the guidance, we’ve assumed that clearly, there will be a reopening in API coming about in Q4, and that’s based on what is known in the public domain today, which is kind of indicating that probably Septemberish, or in thereof, things to start opening up. So, we continue to watch that. The good news is that the impact has not been as severe, given some of the restrictions and the business continues to perform strongly, despite some of those challenges. In Europe, obviously, we are not planning for anything significant or catastrophic in terms of changes. For Q4 right now, we expect and hope that the current trajectory should continue. So obviously, it would have been kind of crystal ball gazing if we try to make all kinds of assumptions because we just have to go with what we know today. In terms of the €350 million to €395 million, I would say to you, everything is very much on track in terms of that delivery. The phasing of what we have committed to for 2021 in particular, I would say to you, all indications are, we will deliver right on, if not slightly ahead of those numbers, but that’s been factored into the range of guidance that we provided. And as we finalize some of our plans, particularly as we look at areas that we might be able to offset some of those challenges from commodities, inflationary pressures, et cetera, we will work with the business units to see how might we accelerate some of those into ‘22 versus ‘23 and ‘24. But, we’ll provide you an update on that probably late in the year.

Yes. I just wanted to give a bit more color to Nik’s comments. I mean, I think on API in particular, we’ve been very pleased with how that business has performed, in spite of these new lockdowns. And I suppose we are learning to operate and perform with lockdowns, and I think API is demonstrating that at the moment and I think that’s great. As we look through the second half of the year, I think it’s really a positive that we could give the guidance we gave. I think that demonstrates our confidence in what we’re seeing in our business, despite some of the macro uncertainties. And I suppose another element, certainly those as based in the UK, I’m happy to say that I could talk about the weather being a challenge in the second half of the year, particularly as we came out of June. And I think that’s also something that we factored in when we look at our full year outlook. So, as a bottler, it’s kind of nice to be able to reference to weather on an earnings call again. And then, as we look through to ‘22, I suppose we have seen the reopenings in ‘21 being a little bit slower and a bit more patchy than we would have liked. Having said that, we still believe we’re delivering great results in spite of that. That will obviously, we believe, come back even stronger in ‘22. So, when we look at some of those pressures that we’ve talked about on the call is also going to be a mix benefit for us as we see away-from-home having a full year of more reopening as we get through the end of ‘21 into ‘22. So, that’s also something that we’re excited about as we look through ‘21 and into ‘22.

Thanks, Damian. And just a quick follow-up on Coke Zero, which has seen really good traction, up 10% versus 2019 levels. Could you perhaps give us your view on sort of how much more of a penetration opportunity? What’s the type of runway you’ve got for Coke Zero, given the money that’s gone behind it and also the reformulation?

Yes. I think, we’ve got a lot of room ahead. I think, we’ve landed on a formulation that’s been really well accepted in the market. I think the visual identity looks great. And we’ve had a number of different graphic iterations on Coke Zero, and we’ve developed that brand. I think we’ve now landed on a look and feel and consumers are giving us positive feedback. If you’ve been in any of our stores, it looks great on shelf. And that momentum has given us more confidence around some flavor innovation, which will be coming and then also continuing to evolve some of the pack varieties. So, I see that brand format being a big part of our growth for a long time to come. It’s playing against two of the real positives in the category at the moment. Obviously, great taste and the sugar free momentum. And certainly, in some markets, that’s still got a long way to go, and we’re excited about it. And as I said, it looks great on shelf. So, I think that’s going to be a big part of what we will be talking about for the next few years.

Our next question is going to come from the line of Mitch Collett with Deutsche Bank.

Hi, there. I’ve got a couple of questions back on commodities. You gave the 40% hedge rate, which is very helpful. Are you able to comment on whether or not that’s the normal level of hedging at this stage of the year. I guess, we’re three-fourth of the way through ‘21. Would you normally be at 40%? Are you able to also perhaps comment on what that input cost inflation would look like on an unhedged basis? So, what is roughly the spot right now? And I think you mentioned that logistics costs sit within OpEx, and it sounds like there’s probably some headwinds there. Are you able to quantify the increase you’re seeing, if any, on logistics costs? And maybe give us a similar steer as to how material logistics costs are for your overall P&L?

So Mitch, on the -- I think, I picked up your question because you were patching in and out. But on the coverage, hedge coverage levels at 40%, I would say to you that that would be lower than where I would have liked to have been at this time of year. Typically, we look at our hedging to be on a rolling 12-month basis somewhere towards that 80%. So, clearly, where the spot prices have been, we’ve been looking to lock in as appropriate when we can. And obviously, the areas that we continue to have open primarily aluminum. We’ve done well with some of the sugar. And I think, as I said, given where some of the PX and MEG pricing is, we should see those be okay for next year from a PET perspective. So, the real main challenge is around aluminum, and we continue to be able to look at both, the spot pricing and when we should lock in as well as the added premium piece, which is significantly high, that’s cash piece as well. So, having said that, I mean, if you look at 2021, as an example, when we go back and look at our hedging, how do we not have the type of levels of coverage that we had just to give you a perspective where we went into the year close to about 80%. You could have seen on spot pricing upwards of €100-plus-million of an impact on our COGS number, right? So clearly, our hedging and doing it at the right time, does pay off. And we’ll continue to look at that and see what we can lock in, but we also don’t want to lock ourselves in, depending on how things might be moving, right? And we do expect, hopefully, some forecasts that we’re hearing that there might be some upward for you. But again, no crystal ball that any of us have. So, we’ll see how that plays out. On logistics costs, yes, you’re right. That is largely a part of OpEx because you do have some element of that in COGS, depending on your -- in the freight between plants to warehouse, et cetera, as well. Clearly, we’ve managed through that cost and that’s factored into our guidance. I think it will be premature to give you any indications on 2022 for now, until we have a better view. So, we’ll provide you an update on that in due course.

Okay. And just to come back on my second question, which maybe my sound quality wasn’t great at the time, but I was really looking for, what is the spot today. If you haven’t -- you weren’t hedging for next year and you had to cover your costs at spot as of now, roughly what sort of level of inflation that you’d be looking at versus the mid to high single-digit range you gave on a hedged basis?

Well, it would probably be that high to, if not even, low-teens with that 40% hedging, and that lock-in of some of the areas that I talked about.

Our next question is going to come from the line of Bryan Spillane with Bank of America.

A couple of quick ones. One, just a follow-up on that last question on COGS. Can you just -- are there any issues with labor? We’ve -- we’re seeing it a lot here in the states. It’s not just labor cost pressure, but it’s like labor availability, I guess, for lack of a better way to put it. So, maybe that’s the first question is, just is there any pressure on either one of those, whether it’s labor cost pressure, but more importantly, just staying fully staffed, I guess?

No. I would have to say, we’ve really navigated some of those challenges well at CCEP, we’ve also invested a lot of time and efforts to keep all of our employees safe during the pandemic to minimize any disruption and obviously, to protect our health fundamentally. So, we haven’t seen it internally at CCEP. We have, I suppose, back to my earlier comment on the UK haulage challenges, which is really external because as you know, most of our haulage is externally sourced. So, we have seen a number of our large contract partners struggling in the UK in labor, the drivers. And that’s a combination of demand, Brexit and COVID impact and people finding where to work. So I suppose that’s the one area that has kind of touched CCEP. But again, it hasn’t been the problem for us generally across all of other markets, and even in the UK, we’re maintaining reasonably good service levels, despite that challenge. And we continue to focus on how we can mitigate that. So, we haven’t -- I’ve been looking at what’s been going on in the U.S. We haven’t seen that trend in Europe or in API or Indonesia.

And then the next one is just, Damian, can you -- as you’re looking at the commercial plans or developing the commercial plans in API, things that you might look to change or swapping best practices. Can you just give us some sense of how COVID or just how this environment right now is affecting the planning and then the execution? So I guess, what I’m trying to understand is just will there probably more -- just is there going to be any delay or any timing effect in terms of implementing maybe some of the changes that you have identified just because the environment is not conducive?

I don’t see that, Bryan. Actually, I think we’ve -- as I mentioned in my comments, we’ve been really pleased with how quickly we’ve moved with the integration of API, not just from, I suppose, a formal integration, but really from getting it in a as you said, sharing best practices and learning from Australia and New Zealand and from Europe. So, I haven’t seen anything but slowing this down because of the pandemic in terms of sharing and reapplying. In some ways, we’ve been able to share a lot of what we went through in Europe with Australia in particular now as they’ve gone into further lockdowns because we have something unfortunately, we’ve been quite experienced at navigating. So no, it happens. I suppose we are looking at the recovery, both in Europe and in Australia as we go into ‘22, and how can we even go faster together. I’m very pleased that Jorge has joined to lead our Indonesia business because again as that recovers through the pandemic, I think there’s a lot we can do together with the Coke company. So, other than it being a challenge to physically get to Australia due to some of the regulations, despite that, I’m really, really, really pleased with where we are as a team and ahead of my expectations, to be honest, by at this stage.

Okay, great. Thanks. And just last one, I made this request to Sarah. Maybe the next slide deck for the next call, you need a picture of you and Nik posing with the Candler Cup.

…Do you want to see Chris Litchfield, our GM in New Zealand…

Need to see the cup. Thanks guys.

Thank you.

Our next question will come from the line of Fintan Ryan with JP Morgan.

Most of my major ones have been answered, not going to go down the route of commodity costs at this point again. But, I’m just interested now that you sort of have the range of API for just over three months, if you could give any insights specifically around the Indonesia business. How is your development or sort of presenting that in a few weeks back and the commercial plan there next year, so post-COVID? Any sort of color there would be welcome. And secondly, again, it sort of relates to the Topo Chico launch in Europe, but any learnings that you’re taking from the alcohol business in Australia, and what you can sort of bring to that business in Europe? And also, I appreciate that I think the Topo Chico launch within Australia is going to be held by a third-party, but how would that conversation come in place? And what’s the relationship with Beam Suntory? Is there any tension there potentially? Thank you.

Thanks, Fintan. So, maybe first to touch on API. As I suppose we alluded to, it’s ahead of our expectations on a number of levels, and since we’ve taken over that business and we’re very pleased with where we are. On Indonesia, in particular, I think it’s impossible not to be excited about that market, when we look at the macros, when you look at the size of the population, per capita levels, GDP growth. Unfortunately, it’s clearly suffering from COVID at the moment. But, I’m particularly pleased with a new GM in place. We’ve taken the time as we looked at the API business to do a full top-to-bottom analysis of the industry there, the categories and our business. Clearly, that’s pointing to a number of decisions that we feel very good about, really focusing on our core brands in Indonesia, particularly Coke, Fanta, Sprite. Building on some of the work that has started on the Amatil around affordability, particularly on sparkling small packs and on taking the opportunity to look at our route to market and our cost to serve. So, that work is ongoing. Obviously, Jorge, with his experience, both in Asia and Mexico, is bringing some great insights into that conversation. And as we look forward to the end of the year and to our next Capital Markets Day, we will obviously be able to share even more around the detailed plan for Indonesia, but a lot happening, very good Ramadan period for our business. So that’s obviously given us some encouragement. On Topo Chico and on the alcohol, and as you said, prior to us acquiring Amatil, Topo Chico distribution was through a third party. That’s something we’ll continuously look at with The Coca-Cola Company. And taking in mind, obviously, we have a great relationship with Beam Suntory and we have a great business there. So that’s something that we are continuing to learn from. And as we look at Europe, clearly, there’s been a lot of, I suppose, experimentation in the Australian business around beer, cider. That’s something that Peter was looking at as well to see what can we learn? And we’ve also, as you know, had a number of markets in Europe where we’ve looked at alcohol distribution and partnerships, so combining all of that together. On Topo Chico, it’s been a very interesting move for the system, would have benefited from a little bit better weather in Europe, if I’m being honest. But, it’s something that we’re encouraged by the category. And over time, we just have to look and see how do we look at that outside of Europe. But ultimately, we’re very pleased with the way the business is structured at the moment, and we’ll come back to that agreement at a later time.

Our next question is going to come from the line of Charlie Higgs with Redburn.

I’ve got two questions, please. The first one, I was wondering if you could talk about your business, and have you seen any impact from The Coca-Cola Company’s decision last year to change its business structure, particularly things like separating trademark Coca-Cola from the flavors? And then also, have you seen any benefits on platform services, or if that’s still to come? And then, the second one, your Coca-Cola, the DTC business here in GB looks to be going great guns. So, I was just wondering if you had any thoughts about potentially expanding that into any of your other markets. Thank you.

Thanks, Charlie. Yes, maybe I’ll start with the last point. Yes, we’ve had a lot of fun and a lot of excitement with our direct-to-consumer business in GB. It’s still early days, but I think it’s proven to be a really interesting move for us to, both build brand value and to engage with consumers in a different way. And I mean, we’re getting a lot of positive feedback of people proposing to people by using one of our cans with a dedicated message and birthdays. And so, that’s been something that we’ve learned a lot from, and clearly, we’re going to look at whether we can reapply that to other markets, particularly Australia, Spain, Germany are big markets. So, that’s work in progress. And I think on The Coca-Cola Company, we are seeing improved collaboration and more alignment. I think a culmination of the moves they made in the network organization and also, candidly, the need to make bigger and bolder decisions due to COVID has just brought us closer. And I think having to align due to the COVID challenges faster and quicker around priorities has just moved the system to an even stronger place in my view around how we work together and how we collaborate. I think, the decisions on brands, I think they’re made market by market and very much aligned with also around the role of flavors. And obviously, as we mentioned earlier, we’re very happy with the new Coca-Cola Zero performance. So overall, positive. And we’ve also had the chance to work a lot closer with them, particularly in Australia and Indonesia, as we wanted to validate some of our deal assumptions around what we can do with those businesses, and in particular, as we talked about earlier, the brand portfolio in Australia. Yes. So what’s happening with certainly a stronger level of collaboration and transparency, I think, due to both of those factors.

Yes. And I would just add. I mean, in the same vein as having set up what was cross-enterprise procurement group with the moved platform services, there’s a lot more engagement on a cross-enterprise collaboration group to ensure that both areas, such as finance and integrated shared services, business process and technology, there is a lot more sharing of learnings and leveraging that across the system, which I think is a great positive as well.

Our next question is going to come from the line of Carlos Laboy with HSBC.

Damian, is your digital capability advanced enough at this stage of your journey that if you don’t get the pricing that you want to cover some of these raw material costs, you’re having up in trade discount management through these tools for next year that maybe you can offset a lot of this impact?

I think, when we look at some of the digital analytics capabilities that we started building coming out of ‘18 and ‘19, certainly, one of the areas that has given us the most insights and value has been around the whole promo effectiveness to understanding where we invest on price promos and the return both to our retailers, but also obviously to CCEP on a profit level. As we look through to ‘22, we spend a lot of money on straight promotions. It’s our biggest investment in our business when you look at it from the top line. So clearly, we want to use that capability to, as I mentioned in my comments, to be smart about the pricing we’re going to take in ‘22. So clearly, we’re hedging. We’re becoming more efficient and predictive as a company, but, ultimately, we are going to take pricing in ‘22 to offset some of those headwinds. But we want to do it in a way that it doesn’t jeopardize the long-term health of our business or our customer relationships. And one of the deltas for that is certainly what you’ve called out, which is to be a lot smarter about how we use existing investments on price promo. And the analytic tools, we’ve developed give us that transparency, and that’s something we didn’t have a number of years ago. So, it’s absolutely part of that decision process around how do we take pricing, how do we mitigate any negatives on our consumer or customers, and how do we use that big, big bucket of cash investment on price promo to make smarter decisions. So yes, short -- long answer, but absolutely correct.

And just very quickly. On Indonesia, you spoke about a recycling investment. Can you speak how your thinking is evolving there as you look at that market on refillables?

Yes. That’s something we’re looking at, at the moment to see is there a role for refillable packaging in Indonesia. It was done many, many years ago, but the system exited out of it. It’s certainly the pack format that I’ve used in a number of emerging markets to drive affordability and sustainability. So clearly, it’s something we’re going to look at to see should that be part of our future pack pricing mix. So, that’s some of the work we’re doing at the moment, Carlos. So, as we get clarity in that towards the end of the year, we’ll be able to provide a bit more color on the roll of refillables in Indonesia. We’re also continuing to use refillables in Europe. We just launched a 400 ml RGB glass pack in Germany, refillable. I was in the market that recently, looks great on shelves. So, that’s a very different use of refillable, not so much on the affordability play, but much more around sustainability and premium, and that’s in on-the-go. So, we’re continuing to look at how refillable can play a role, not just from the traditional affordability piece, but ongoing on the sustainability agenda in some markets. So, on Indonesia, it will be key to that, absolutely.

Our next question is going to come from the line of Sean King with UBS.

I apologize if I missed this, but what are you seeing in terms of market shares in the away-from-home channel that they return? And any efforts that you’re making to kind of lean into that reopening opportunity?

Thanks, Sean. Yes, we’re seeing, obviously, in Northern Europe, away-from-home reopening very strongly. And we put in a number of programs coming into the second quarter actually to support our customers on reopening from basic cold drink equipment post mix readiness through to promotions. Digital initiatives, particularly in France and GB, have gone really well. So, that’s obviously supporting our customers and supporting our share. So, we continue to perform extremely well in away-from-home. In other markets, it’s reopening a bit slower, particularly in Iberia, and that’s mainly on the back of tourism and a slower recovery in tourism during the summer. But, we’re seeing about 90% of the outlets reopening. So, that’s probably higher than we originally anticipated. So, it’s a very resilient segment in HoReCa across all of our markets. So, we’d expect that to continue into ‘22. And then, obviously, the biggest delta then will be footfall. So, as people get back to the office, transportation, tourism, we’ll see footfall in HoReCa continue to improve. We can see that already in markets like the UK, which is probably further ahead than some of our other early European markets. So, we can kind of pretty much track how that’s going to progress and then work with our customers to make sure we’ve got the inventory in place. We’ve got promotions in place. And as I mentioned earlier, that will be a benefit as we look through to ‘22 in terms of our mix and as the away-from-home channels come back even stronger.

And our last question for today will come from the line of Simon Hales with Citi.

My first question, perhaps Damian, you partly answered this, perhaps, in response to Carlos’ question around digital capabilities. But, coming back to the whole price negotiations with customers as we head into the year-end, clearly, most consumer companies are facing significant cost headwinds and need to price. I just wonder if there’s anything from a CCEP side specifically that you think gives you an advantage relative to other FMCGs, to be able to get those pricing negotiations over the line? And then, secondly, when we think about sort of elasticity of demand to those pricing moves, how are your assumptions there perhaps evolved over the last sort of couple of years, given the portfolio change we’ve seen, the changes to package mix, et cetera, in the business? Is there anything you can share with us there?

Thanks, Simon. Well, clearly, we’re very focused on that whole pricing strategy, and it’s something that we’ve -- I think since we created CCEP, it’s been part of our story around price/mix and leading those pricing conversations with our customers. What gives me some degree of confidence is really the value-creation story that we’ve laid out. So, we’ve consistently generated the highest amount of revenue for our customers, not just within drinks, but across CPG. And I think that gives us a good seat at the table to discuss proactively with our customers what’s the right decision to make for the category and obviously, for both of our businesses. So, I think on value-creation platform, if you just look at the size and scale that we now represent of our customers’ revenue and profitability, I think that’s clearly something that gives us a strong platform. Secondly, brand love. I mean, I think we are very, very fortunate to have some -- well, certainly, the best beverage brands with some of the best brands across the CPG, better consumers and shop . And we never take that for granted, and that’s why we take pricing decisions not just on a one-year basis because we don’t want to damage that relationship. But clearly, that gives us a lot of confidence in terms of brand strength. And that also flows through to the elasticity point that you’ve made. And we clearly know in some channels and some occasions that we have got a lot more pricing elasticity than we probably realized a number of years ago. And I think that certainly is going to support our pricing objectives. And then mix, we haven’t talked a lot about pack mix today. But, obviously, from a beverage category perspective, we’ve introduced a lot more premium small packs. On-the-go has been impacted by the pandemic. That should come back, and our IC mix should come back. So, while that’s not direct pricing, clearly, it plays in the whole net revenue per case evolution, which is what we’re focused on and getting that ahead of the commodity headwinds. So, all of that together, I think, helps. I think the second aspect that we raise is that we’ll continue to invest in our business. So, when we sit with customers and we talk about pricing, we’re doing that on the back of multiyear investments with the Coke company in media and advertising, our trade marketing investment remains, our capital investment remains and we’re still investing in innovation, whether it’s with the Monster company or with the Coke company. So, it’s never easy and I think anybody who sat in front of a customer to talk about pricing. And we’ll affirm that. But, I do think we’ve positioned ourselves as best we can for those discussions. And as I said, they’ve already started. And that gives us confidence in what we’ve laid out today.

Thank you. I would now like to turn today’s conference over to Damian Gammell for his closing comments.

Thank you, operator. And again, I just want to thank you to everybody for joining us this afternoon and this morning. As myself and Nik have laid out, a very strong start to the year in the first half, and we’re very, very pleased with that. Also, really pleased that our integration of API continues to go really well. We are now very-much focused on delivering the full year of 2021, and we’re looking forward with excitement through to 2022 as we continue to come out of the pandemic and the COVID restrictions that we’ve seen across our business in 2021. As both myself and Nik have talked to today, we believe we’re well-positioned to manage some of those shorter-term inflationary headwinds. And in parallel, we’re very much focused on the long term of this great business across a number of areas, but in particular, our sustainability journey, our digital investments, and finally and most importantly, our people. So, with that, I’d like to end today’s call. And again, thank you for joining us. And we very much look forward to speaking to you again about great business at CCEP. Thank you, everybody.

Once again, we would like to thank you for participating on today’s Coca-Cola Europacific Partners conference call. We appreciate your participation. You may now disconnect.