The paragraph introduces a question-and-answer session for PepsiCo's 2024 second quarter earnings. The Senior Vice President of Investor Relations, Ravi Pamnani, gives a cautionary statement about forward-looking statements and refers to non-GAAP measures. PepsiCo's Chairman and CEO, Ramon Laguarta, and CFO, Jamie Caulfield, are also present. The operator reminds participants to limit themselves to one question. The first question is from Dara Mohsenian with Morgan Stanley.

Dara Mohsenian asks about the company's implied organic sales growth guidance for the back half of the year and how they plan to achieve it, specifically in regards to Frito-Lay North America. CEO Ramon Laguarta explains that while they initially expected around 5% growth, they have adjusted their guidance to around 4% due to the current soft consumer environment in the U.S. However, he remains confident in their ability to meet this guidance due to their earnings performance and the work they have done on productivity and cost reduction. He also mentions the recovery of the Quaker supply chain by Q4, which will positively impact their business growth.

The second half of the year is expected to bring better growth in the mathematical and international aspects of the business, while the US market is facing challenges. The company is focusing on providing value to consumers and turning around the food business to increase volume and revenue. The North America beverage business is also a priority for the company, with a goal of delivering profitable growth and improving margins.

PepsiCo's CEO, Ramon Laguarta, believes that the company is executing their playbook well and will continue to see profitable growth in the second half of the year. They are investing in advertising and marketing for growing platforms and are confident in the momentum they will have going into 2025. When asked about PBNA, Laguarta mentioned that Gatorade and Propel have been gaining share and they have been investing in innovation, execution, and branding rather than promotions. He also noted that the challenges faced last year in the G2DSD category are improving.

The speaker discusses the company's progress towards perfection in service levels and growth in their Mountain Dew brand. They also mention the success of their Zero products and investments in their food service business. The next question is about Frito and the speaker mentions that the salty snack category as a whole is facing pressure.

The speaker is addressing concerns about the lack of response to promotions in the broader category. They believe the issue is a value gap and are focusing on targeting specific products and consumers instead of blanket promotions. They give an example of their unsalted portfolio needing a value intervention, while other parts of their portfolio are still performing well with high consumer frequency.

The company's portfolio is growing rapidly, particularly in the permissible part of the portfolio with brands like SunChips and Smartfood. The company plans to use marketing, investment, and awareness to drive category growth and take responsibility for managing the category in the long-term. They are confident in their ability to make small adjustments in value, execution, and innovation to achieve this. The company has already seen positive returns from these efforts in volume and net revenue, leading to an inflection in Q3 and Q4. The next question is about Frito, and the company has been able to reset margins and fund it with productivity from other areas.

PepsiCo CEO Ramon Laguarta discusses the company's productivity pipeline and its impact on future margins. He explains that the company has a multiyear and strategic approach to productivity, and does not expect it to slow down in the coming years. He also mentions the importance of Frito's growth, rather than its specific margin, for long-term value creation.

The focus for Frito is to continue growing above the category and bring new opportunities for channel expansion. The company is confident in getting it right soon and will continue to invest until then. The profitability of the company is managed through different sub-strategies for Frito, PBNA, and international. Some parts of the portfolio may need value adjustments and new entry price points for certain consumers, but overall the portfolio does not need a reset. The company is well-prepared to execute these changes throughout the value chain and can give back some value to consumers after years of inflation.

The speaker discusses the interventions that will be made in the second half of the year to drive business growth, including investments in marketing and better execution. They also address the weaker performance in Latin America, attributing it to changes in disposable income in Mexico due to recent elections. Overall, they do not foresee any issues in the region and expect fluctuations in different countries.

In the LatAm region, the company is performing well and expanding its margins and scale in multiple markets. The next question from an analyst focuses on the company's growth potential in international markets and the factors driving an improvement in organic sales in the second half, which are primarily in North America. The company also expects continued growth in international markets, with a broad portfolio and investments in execution and brand development.

The speaker believes that the energy drinks category will continue to provide good prospects for the industry in the long-term, despite some recent slowdown in growth. They mention that there may be some cannibalization between energy and hydration drinks, but this is just a short-term trend and shouldn't be overinterpreted.

The speaker discusses the potential for growth in the consumer energy market, citing factors such as price, functionality, and clean labels. They also mention the positive impact this segment has had on their company and its partners. The next question addresses the projected mid-single digit organic sales growth in the second half, with a focus on North America and investment in the away from home channel.

Ramon Laguarta discusses the performance of PepsiCo's international business, noting that the portfolio is diversified and resilient. Europe has been particularly strong, with growth in top line, share, and margin improvement. Latin America and the AMESA region also show growth potential, with India being a major investment area.

PepsiCo is investing in infrastructure and brands to capture a high demand market for the next decade. In China, the cautious consumer is saving more than spending, but PepsiCo's low ticket items are still performing well and gaining market share. The company continues to invest in different regions and improve penetration and distribution. The company has an advantage in China due to their strong R&D center and advantage products. The international business is almost $40 billion, higher margin than average, and the largest growth opportunity for the company in the next decade. PepsiCo is focused on investing in this part of the business for continued growth.

The operator introduces a question from Robert Ottenstein about the Carlsberg Britvic transaction and why it made more sense for Carlsberg to buy Britvic rather than PepsiCo. Ramon Laguarta responds by saying that it was a UK decision by Carlsberg and they trust them as a partner. The operator then introduces a question from Carlos Laboy about PepsiCo's international franchise doctrine and how they are compelling independent bottlers to invest for accelerated system revenue growth and bottling returns.

Ramon Laguarta, CEO of PepsiCo, is pleased with the company's relationship with most of its bottlers and the strategic alignment they have. The international beverage business has been a growth engine for the company, with a focus on non-sugar products like Pepsi and Gatorade. The company is prepared to invest even more in this area and is working to improve infrastructure for long-term success. In terms of overall food volume, there has been pressure across the board, not just in salty snacks.

PepsiCo CEO Ramon Laguarta discusses the impact of inflation on food prices and how it is affecting consumer behavior. He mentions that the company is focused on using data and segmentation to address the issue and reignite growth. He also mentions that GLP-1, a hormone that regulates glucose levels, is not a major factor in their category and that they will address economic value relationships in the second half of the year. The last question comes from Kevin Grundy of BNP Paribas.

The speaker discusses the demand weakness in the snack industry and how it is affecting different income levels of consumers. They mention that all households, regardless of income, are becoming more price conscious and looking for value. The speaker also notes that higher income consumers are adjusting their behaviors to be more affordable, but overall, consumers are more cautious and selective with their spending. The speaker sees this trend in their own category and believes it is important to provide value to consumers.

The speaker addresses a problem in the category and states that addressing it will lead to growth. They express confidence in the tools and resources they have and thank investors for their support. They end by encouraging people to buy PepsiCo products and conclude the presentation.

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