The paragraph introduces the question-and-answer session for PepsiCo's 2023 Fourth Quarter Earnings and provides important information for participants, including a cautionary statement about forward-looking statements and the use of non-GAAP measures. It also mentions the presence of PepsiCo's Chairman and CEO and Executive Vice President and CFO, and reminds participants to limit themselves to one question.

The speaker, Bryan Spillane from Bank of America, asks a question to Jamie Caulfield about the company's guidance for organic sales growth for the year. Ramon Laguarta, the company's representative, responds by explaining the previous years' growth and how the current year's forecast fits into that trend. He mentions that the company has consistently seen double-digit growth in both top line and bottom line, but they expect a normalization in the coming year due to various factors, including a recall of Quaker products. Despite this, they maintain their guidance for the upper end of the top line and maintain at least four for the bottom line.

The company has experienced a food safety incident in their supply chain and is also facing geopolitical events and a slowdown in the U.S. market. As a result, they have lowered their guidance for the top line. Despite this, they feel confident about the U.S. consumer and hope for a boost in the summer. The Frito business has seen a decline in reported volume, but when looking at a multi-year stack, the performance appears more stable.

The speaker, Ramon Laguarta, is responding to a question about the near-term results and future plans for Frito. He explains that they are expecting the business to return to profitable volume growth in 2024 and that there is a dynamic between units and volume due to changes in consumption patterns. They have a strong commercial plan for Frito, with increased investments in core brands and a focus on their permissible portfolio. They expect Frito to continue gaining market share and anticipate a rebound in the category.

In this paragraph, the speaker discusses the profitability of PBNA and their plans to improve it. They mention their goal to reach mid-teen operating margins and state that they do not plan on making any structural changes to their business. The speaker also highlights the progress made in margin improvement over the last three years.

The PBNA business has seen improvement in the last few years and this is expected to continue in the future. The company is optimizing its portfolio, supply chain, and global business services to drive sustainable margin improvement while remaining competitive in the market. The business has grown in line with the category and increased operating margin. The company also discusses the international business and mentions that margins are picking up and there are no major concerns regarding hyperinflation in Argentina.

The speaker discusses the international business opportunities for the company and its growth potential. They mention the company's current scale and profitability, and their plans for continued growth through investments in markets, brands, systems, and capabilities. They also address a specific situation in Argentina and its impact on sales growth. A question is then asked about the company's plans for the future, and the speaker responds positively.

Dara Mohsenian asks about PBNA's market share struggles and changes in strategy for top line growth. Ramon Laguarta responds by stating that they manage the business as a full LRB, not just focusing on CSDs. He believes they have a strong portfolio, including sports and hydration, coffee, tea, energy, and CSDs. Their priorities for the year include relaunching Pepsi with a focus on Zero, investing in Mountain Dew and launching Baja Blast as a permanent SKU. They are also seeing success with Starry in the Lemon Lime category and will continue to invest in it. Overall, they feel good about Gatorade.

Gatorade is expanding from being a sports drink for high performing athletes to a range of hydration and fuel solutions for all types of active individuals. This includes not only liquid options, but also powders, tablets, and personalized equipment. The brand is also launching Gatorade ID, a loyalty and personalization program, and has a successful portfolio in the energy and tea categories. The company is focused on growth in both retail and away-from-home channels, with a strong emphasis on innovation, brand investment, and execution.

During a conference call, Peter Grom from UBS asks a follow-up question about the company's organic growth. Ramon Laguarta, the company's CEO, responds by mentioning internal initiatives and an assumption that the US consumer will continue to improve in confidence and disposable income throughout the year. He also mentions a strong productivity program and the company's ability to rely on brand building, innovation, and execution to drive growth. Jamie Caulfield, the company's CFO, adds that 40% of their business is now international. The next question comes from Gerald Pascarelli from Wedbush, who asks a question about energy drinks.

PepsiCo CEO Ramon Laguarta discusses the company's plans to improve performance in the energy drink category, which has been underperforming for some time. He mentions the growth of the energy category and PepsiCo's multiple strategies, including the Starbucks partnership and the Rockstar brand. The company will focus on the zero and recover versions of Rockstar, as well as targeting the Hispanic market.

PepsiCo sees their portfolio of solutions, including sales use, as a strong point of execution for them. They are launching Rockstar internationally in various markets and have seen success. They expect commodity inflation to moderate, but do not comment on specific movements. They are not seeing any relief for Frito in terms of potato crop or vegetable oil costs.

The speaker is asking for more details on how the company plans to increase sales in away-from-home channels where their market share is not as strong as in snacks. They also ask if retailers are asking for promotional rollbacks given the company's strong gross margin delivery. The speaker also asks for clarification on the company's organic sales growth and EPS cadence for the year. The response is that organic sales growth will be stronger in the back half of the year due to easier laps and the company's focus on innovation and brand relaunches. The company aims to create win-win plans with their customers and will invest in growth opportunities.

The company is planning to invest in creating more value for consumers through promotions, events, and partnerships with customers. They see away-from-home consumption as an opportunity for growth and are investing in distribution and new food experiences. The move to direct store delivery for Gatorade and the success of the CELSIUS brand are also discussed.

The speaker discusses how the company CELSIUS impacts the income statement in the U.S. and how their relationship with the company has evolved. They mention the transition from Gatorade to CELSIUS and the positive impact it has had on financial results. They also mention the collaboration with CELSIUS in international expansion and the potential for leveraging the PepsiCo system for further expansion. A question is then asked about the increase in SG&A over the past four years and the speaker asks for further context from Ramon.

The speaker is curious about how much of PepsiCo's increase in selling and distribution expenses is due to inflation versus investments made by the company. The response from PepsiCo's representatives is that the increase is a combination of market and sector factors, productivity improvements, and investments in distribution and growth. They also mention that labor costs and advertising and marketing expenses have also contributed to the increase. They do not provide specific guidance on volume trends, but state that organic sales growth will be more weighted towards the second half of the year.

During a recent conference call, PepsiCo CEO Ramon Laguarta discussed the company's guidance for the second half of the year. He mentioned that they are expecting positive volumes and a more balanced approach between pricing and volume. They also plan to increase advertising and marketing spending, which has been lower than pre-pandemic levels.

In this paragraph, the speaker discusses the company's advertising and marketing strategies, stating that they plan to continue investing in both large and small brands. They also mention the impact of no longer advertising in Russia and emphasize the importance of creating demand for their products through advertising and distribution. The speaker also mentions the upcoming transition to a new CEO, Jamie, and notes that the following question may be directed towards them.

The speaker discusses the company's cash flow profile and investments made in the past, and asks the new CFO about opportunities to increase cash flow generation and return to higher levels of pre-cash flow conversion. The CFO mentions intentional investments in capacity and IT, but expects the level of CapEx to decrease over time, leading to improved cash flow conversion. The speaker thanks everyone for their confidence and looks forward to discussing more at an upcoming conference.

This summary was generated with AI and may contain some inaccuracies.