I'm thrilled to welcome Coca-Cola back to our conference. With us today, our President and Chief Financial Officer, John Murphy. John, thanks for joining us. Pleasure to be with you, Steve. Okay, great! So we'll use the entirety of our time for some Q&A. And John, I just wanna start, I guess, kinda big picture. We've been through a lot over the last several years. Your business has been remarkably resilient, stable, balanced growth, especially relative to a lot of other companies through that period. Essentially, there's a lot of drivers, I'm sure, involved, but how would you summarize what's allowed you to sustain that, sustain that delivery? Well, Steve, good to be back, and it indeed has been a very interesting few years. You know, I'd couch maybe my answer into a few buckets. Number one, I think one of the intangibles that we probably don't, you know, we don't talk about a lot is just what's the ambition, the underlying ambition that we have as a company, we have as a system, to create value? And I think that the last few years, we've developed a mindset internally that is pretty aggressive. Pretty aggressive in terms of what we want to accomplish, both as a company and in partnership with our bottling partners around the world. And that makes a big difference. I think connected very much to that then is a belief in the strategy that we are deploying, and a willingness to stay kinda boring with the strategy. Mm-hmm. And to keep consistency at its core. We, you know, we've talked for many years about following the consumer and the opportunity that that creates, and I believe that the last three to four years, we've seen tremendous consistency with how we convert that opportunity into value in many different markets around the world. And that conversion is very, very much related to our ability to execute. Mm-hmm. And to execute on a daily basis. We have. You know, it's a daily business. And that kinda leads me to maybe the last point, which is potentially the most important one, is the ability to manage in an environment where there's always different puts and takes coming at you. Some of them have been on our radar screen, and yet more often than not, you're thrown a spanner to deal with. And each and every quarter, gosh, if I go back to the last 16 quarters or so, there's not been one where we haven't had the occasional spanner at us. First quarter of this year is a good example. We had some softness in India, one of our most reliable markets for the last three or four years. We're seeing in the United States at the moment, in the away from home, maybe some of the segments there are weaker than perhaps we had anticipated. China has taken a little longer to recover. Mm-hmm. And yet, with all of those individual components, the reason that James and I like to use the all-weather words, not just because of where we come from, is that underneath, you know, underneath that umbrella of delivery. Mm-hmm I n a consistent way each quarter, you've got these puts and takes happening all the time, and I think having a mindset isn't to feel, "Okay, that's the new order that we need to operate in," and it's up to us to figure out a way to get the top number to be reliable and to be consistent. In all those environments. Yeah. So you touched upon, it's been a big, a big topic all week in terms of, especially the state and direction of the U.S. consumer. Yeah. In general, you know, the kinda consumer health globally. For businesses that serve multiple channels like yourselves, there's been a lot of discussion of sort of, you know, acknowledgement of choppiness in away from home channels today, but also kind of a question of where we go. So how are you... As you think about, you know, the next 12, 18 months, how are you kind of forecasting consumer demand, you know, maybe through a geographic lens- Yeah But also by channel kinda differentiation between, you know, kind of future consumption channels, immediate consumption, and, you know, and away from home food service? So I think it's important... It's always been important, but it's even more important today to be super segmented in answering a question like that. Like the consumer is a, it means a lot. Yeah. So underneath the consumer, there are different segments with different behaviors driven by different dynamics. I think you've heard other companies, you read it in the media, there's a consumer segment in the United States that is under more pressure. Mm-hmm. And that's the result of, I believe, an accumulated impact on their overall ability to spend their basket, for want of a better word. And I think over the next couple of years... in the developed world, as much as we have had as a major area of focus in the developing world, will be the opportunity to have solutions that tailor to each of the segments. And in the case of the U.S., you know, we've talked a little bit in the last year and a half or so about more affordability solutions in our portfolio, and I think the name of the game will be to even enhance what we currently have so that we don't lose that particular piece of the consumer portfolio. Okay. So, one of the, you know, major drivers of the all-weather strategy, or one of the major underpinnings is just marketing. Yeah. That's not new for the Coca-Cola Company and system, but it seems to have taken on an increased focus, if that's possible, over these last four or five years. Investments have been outsized. They've been highly intentional. You know, as you would summarize, like, or how would you summarize the advances that you've made in there and to drive the returns that we've seen? Yeah, so, maybe if I could just take us back a few years. In 2019, before we had COVID even on our horizon, we knew that there was an opportunity to step up in our ability to deliver to our bottling partners, to our customers, and ultimately to our consumers, what was needed. COVID came along and gave us an opportunity to reset the investment base. I remember Manolo and James and I talking about the opportunity to... "Okay, we think we can do for $3 billion what we're currently doing today for $4 billion." Like, that was the opening. Mm-hmm The opening kind of salvo for us to take a step back and really get underneath the hood of marketing. That work led to some broader realizations. First one being that we have spent, had spent many, many years rotated more towards having people who already consume our portfolio to consume more. Mm-hmm I nstead of recruiting more non-users or sporadic users into the portfolio. The second realization is that the world outside was moving faster than we were inside when it comes to the impact that technology, that digital is having on engagement models, on ability to connect. And I think the third, not so much a realization, I'd say, but it was just a reinforcement of what we already knew, is that we had become very fragmented in our approach around the world. Fragmentation can be good, but at a certain point in time, it can lead to both inefficiency and ineffectiveness. So coming out of that initial, initial objective were a number of bigger realizations, and I think Manolo and his team have done a pretty good job in then converting that into a very focused agenda. Again, parallel to the marketing work, we also knew we had far too many underperforming brands in the portfolio. So the marketing agenda of today, I'd say, you know, is focused on shaping that right portfolio that can optimize value for our system. Number two is to rotate more resources to bring more people into our consumer franchise. Mm-hmm. Number three is to continue to understand what are the levers to drive both efficiency and effectiveness together. Doing one on its own, really not going to get you to the kind of high-level performance that we're looking for. And I think the fourth and a very fundamental one was the need to completely change our so-called operating model. Mm-hmm. And so the work that Manolo has been driving with our partnership with WPP, the creation of a network model that's made up of nine different studios around the world, so that we can be both global and local, be scale and intimate at the same time, is starting to bring some tremendous value to the equation. And the digitization of the way you engage in the world today, I think we have gone from being slower on the inside than on the outside. Mm To, in some cases, perhaps being a little bit faster. At the advent of AI, I think we were still trying to figure out a year ago, what does it mean? And the way that that's inserted itself into how we are creating content. Mm How we are engaging differently is palpable at the moment. Yeah. I think a very good first set of steps towards getting to where we need to be, and that has been the best marketing company in the world. Yeah, and the net result also is that you're not getting the same out of that. You know, you're not getting that $4 billion for $3 billion. You're getting more out of the $4 billion. Correct. Yeah. Correct. You're getting four. And you're also, as part of that third lever, that efficiency and effectiveness, you've got an ongoing mindset to do the same with less, and being able to then decide whether I want to take the benefits of that and reinvest, which we've been doing with great deliberation and much greater precision around the world, or whether you want to take it to the bottom line. Yeah. Having the wherewithal to decide, going back to the first question, to decide on an ongoing basis what you wanna do with it is, I think a tremendous foundation on which to be able to manage through these puts and takes. Yeah that are always popping up. Okay. Not always. Next quarter's gonna be smooth. The other place you've leveraged technology, and AI even, is in product delivery and innovation, right? So I wanna drill in a bit on innovation, but not just on product innovation, 'cause you've also looked to drive, you know, bigger and smarter innovation across packaging, across marketing... Sorry, across equipment we find in the market. You know, so how do you think about innovation across all those different domains, and where do you, you know, how would you describe the organization's advances? Yeah, I think there are different, different ways to talk about it, to describe it. I think for a company to be around 138 years later, you've gotta have it in your DNA a little bit. You know, to continue to stay relevant, to continue to be able to create value in new environments, demands you have innovation in your DNA. And I think in some respects, over the last number of years, we have done a disservice to the power of innovation by sometimes limiting the conversation to: What are you launching next week? What's the next new, the next new thing in the marketplace? It's not to say that that's not important, I'll come back to that in a moment. But I think the power of a mindset that is constantly searching for something new that will create value is. It's not just words. Mm-hmm. If I go back to what we're doing at the moment in the world of marketing, I would argue that there's a tremendous amount of innovation at the heart of the change program that's underway there. You know, if you look at one of the recent Coke ad that we've had, the Coke campaign with Marvel, and if you just go in and look at the way in which that has been created, produced, and delivered, it wasn't possible to do that 24 months ago. And so I think there's tremendous amount of innovation in there. When I look at our revenue growth management capabilities around the world, there's a tremendous opportunity to move from the basics to become, what I say, advanced, to ultimately become Olympian. We like to use the word Olympian in our, not just because- Olympics W e're in Paris. Yep. But there's a very close relationship between your ability to get from basic to Olympian with the degree of innovation you're bringing into the solutions you're developing. And then finally, when it comes to, I think, the sort of, maybe the core piece, the product, the package piece, there's a capability set that we need to continue to build on. And the last couple of years, for example, we've invested an outsized amount in the whole world of flavors. Like, it might seem like a fairly ordinary topic for some, but the degree to which there's the opportunity to use AI to understand how to mix and combine different flavors to produce something better than we've had in the past, is happening as we speak. Mm-hmm. The work on Sprite and Fanta at the moment is derived from that new flavor technology that we have. So it's everywhere. Yeah. I think the onus on organizations is to kinda stay agitated that, as I say, the world outside might be moving faster than you are, and to not allow that to happen. Mm-hmm. Okay, great. I wanna talk about the portfolio and the role that different aspects of the portfolio play in different markets. So obviously, Trademark Coke is at the center. You know, you know, traditional sparkling flavor is not too far to the side, but then there's been in the total beverages construct, lots of advances, not only in juices, but dairy, and coffee, and obviously, the partnership with the Monster on energy. Yeah. You know, can you talk a little bit about the different roles those brands play or those categories play in different markets? So the developed market strategy versus the developing market strategy, and obviously, lots of different variations within there, but just the construct about how you leverage the portfolio in different markets. So, it's a great topic. If I were to kinda describe over the last number of years, one of the major evolutions that we've had as a company and we've had as a system, it would be a move from being primarily focused on persuading people to drink Coke, Fanta, and Sprite. Mm-hmm To us becoming more agnostic and becoming much, much better at understanding what people really are looking for and why. And so that move then has framed what I would call our total beverage strategy. That work is rooted in a fundamental understanding of who our consumer is, where are they, what do they want, why, et cetera. We have, you may have heard it at the CAGNY meeting, we've converted that into a group of really important need states, and then linked the role that a brand, each of the brands can play relative to those need states. But that's only part one. Like, that in and of itself is not going to get you a nice document that will look exciting. I think the second part then is to be able to connect that to how you create value, and creating value through outsized marketing and innovation of the brands that are linked to those need states, and creating value through our customer network, becomes the second piece of the equation. The third part then, that for me is the holy grail of consumer goods, is creating scale, scaled solutions, because that's where the real value gets created. Mm-hmm. So when I think about portfolio, I think about it through those lenses. You know, the developing world and the developed world, maybe one construct to look at, but each market has got their own dynamics, and I think it's super important that there is a grounding then as to where are we in a given market. India is a good example. Today, we talk about the opportunity in India. Brand Coca-Cola is still a challenger brand in India. Mm. It's one of the hardest tasks we have is to take on—I was talking about earlier—to take on different persona to be able to manage brands the right way at the right time. So you take on a leader persona, then you behave differently than if you're a challenger. But when you're the same person trying to do both, in a country, it's a different skill set, and so we're on a journey, I think, to getting there. And in a place like India, you know, we've actually taken on that challenger mindset to unleash the potential that it has, and we're very pleased with the early stages of that. And in other markets, it might have a different role to play, and therefore, the tactics that you deploy may be different, may be adapted accordingly. Okay. And you mentioned revenue growth management earlier, and I'm curious as to how that overlays and allows success into what you just described. Because, you know, we used to talk about the OBPPC. Yes. O ccasion, brand, price, package, channel. The price part of that is important, right? Yes. How have advances in revenue growth management allowed you to be more precise? What does best-in-class RGM look like for the Coke system? So where will I start? I'll go back to what I was saying. You've got a, I think, a series of phases that one goes through to get to best in class. Best in class is a relative term, so I'm not even sure that's enough over time. I think part of what we're agitated to do is to be just the best in an absolute sense. But going back to the sort of the fundamental basics of RGM is having an architecture of a price pack channel architecture in place that allows you to ultimately optimize your revenue per point of sale. And technology is our friend in this regard. By doing that, just to be dramatic for a moment, doing that with pen and with a pencil and a piece of paper, versus doing it with algorithmic models that are fueled by AI, allows you to get to much greater precision, allows you to bring segmentation to life in a real way. And many of our bottling partners, some in the room, are on the journey to doing that. I think the opportunity ahead, particularly as I think about the role that technology can play, is to have much greater cohesion between how we want to connect and engage with shoppers, and how we want to partner with customers, and have that all be part of an end-to-end game, and I think there's a lot of good work underway to get there. Mm-hmm. Like RGM, I've said it before, is an iteration, is an iterative game as opposed to an end game, and we see continued opportunity. Today we have a, for example, one just good example, we have a model that we are rolling out around the world that allows you to, in real time, understand your relative position in a store, both in terms of price and your overall availability. Mm-hmm. It can give you kind of automatic suggestions as to how to dial up or dial down working directly with the customer. You can do that in a very personalized way with customers. Mm-hmm. You know, it takes your ability to realize value to the next level. Mm-hmm. So we're... You know, I know we talk about it a lot. Mm-hmm. But it's for a reason, and I would hope that we'll be talking about it for a long time to come because it's the ultimate medium between identifying the opportunity and realizing the value. Yeah. associated with that opportunity. Yeah. One other topic that we talk a lot about generally at conferences like this, and we have, is around productivity and cost savings. We don't talk about that as much when it comes to the Coca-Cola Company. But I think it's happening kind of behind the scenes as part of the everyday aggressive mindset you talked about. Yeah. Aggressive on cost. So maybe can you just bring that to life a little bit? How does the company, how do you think about productivity and efficiency, and how does that fuel some of the underlying margin progress that we've seen? So I think there's a few points. First of all, it's important. If anybody here is in the company who knows me, they know I think it's important, and we think it's important. I think it's a company that has got a lot of resources struggles to have a frugal mindset. And so I, you know, a big part of the productivity equation is trying to sustain the appropriate frugality. Mm-hmm. while at the same time, knowing where and when to invest. To create—I think to create the opportunity to invest in the most aggressive and optimal way, there's many different sources. You know, within inside of RGM, there's a productivity opportunity in how we build those fundamentals. I mentioned the marketing programs that we have. There's just—we've already realized a lot, but I see continued opportunity to either do more with less resources or do more with the same. And having that as an ongoing mindset, and it's measurable today. It's measurable. We have with Manolo and I, we have a very clear target each year to be able to create so we can choose what to do with it. And then we've got a supply chain, like other companies have, and within our supply chain, Nancy Quan and her team, who's our head of technical, have a continuous productivity program. Mm-hmm. So we're not, we're not announcing big programs. Maybe that's why you haven't heard us. Yep. Too much about it. But if you look at our gross margin line, and you were to exclude the impact of bottling investments, additions that we took on for strategic reasons Mm-hmm. And the addition of some of the finished goods businesses, like our margin profile would be in the mid-30s at this stage, our operating margin profile. Mm-hmm. So I think it's not just words. I think it's showing up through the ongoing delivery of. Okay O f our results. Can you talk a little bit about how, you know, on all these aspects, revenue growth, management, cost discipline, or cost, you know, kind of frugality through the system, how the Coca-Cola Company and the bottling partners, like as you say, many of them are in the room, have evolved their working relationship to drive that end to end, as opposed to looking at it kinda separately at each phase in the value chain? I think there's a number of inputs to where I see our system today. You know, it starts at the top. It starts with trust. You know, you earn trust with your actions over time, and I'm happy to stand on the stage with any one of our bottling partners around the world and talk about the progress we've made in that regard. Mm-hmm. That opens the doors up then to do so many other things, both in a connected and a collaborative way. Mm-hmm. So, I think there's been a significant move toward trying to understand our respective sources of value creation. Mm-hmm. to one that sees the bigger picture first. Obviously, we have to, we then have to work out how to feel that we're getting our fair share. But I think there's been, you know, there's just been remarkable progress in that regard over the last few years. Mm-hmm. The second piece that's so important in this relationship is having a shared ambition. Mm-hmm. There's no point in us talking if I think we can grow at 10%, and you think it's two, or vice versa. Mm-hmm. That immediately leads to the wrong, wrong avenues of, of dialogue. And so at—I think the trust piece allows you then to have the more, the more constructive dialogue on how high is high, how high should we go, and, and get to a point where you, you, you then build off that. Mm-hmm. As opposed to, you know, passive-aggressive behavior, where you're gonna pretend you do, but you really don't, and that leads to all sorts of, I think, unintended consequences. Yeah. I think the third area that we're both really, really sharp on at the moment is this notion of not allowing the outside to run faster than the inside. Mm-hmm. What that means for the capabilities that we respectively need to invest in. Being willing to invest ahead of the curve to bring those on stream before perhaps the real value gets created is another really important piece and/or variable. Mm-hmm in this equation that I think is moving the system to a new level of performance. Okay, great. There's been a lot of focus of late on the Coca-Cola Company's headline free cash flow. Yes. It's been more volatile and, you know, in ways that are likely to continue into 2025. So maybe you can kinda, you kinda walk us through some of the puts and takes, just makes everyone's grounded. But there's also been arguably more consistent underlying trends. So I'd love your perspective on how you're viewing free cash flow and how to kind of translate what we're seeing in the headline number to what you're seeing, and then, kind of your conviction that we can get back to, like, a more normalized run rate as we look out to 2026 and beyond. So I think, I think it's been a, you know, it's been a huge area of focus for the last few years. If you look at the underlying trend, the underlying delivery, I think that they speak for themselves in terms of how, how we have really moved the needle since if you go back to 2017, 2018. Mm-hmm. We've, I think, doubled it since then. Yes, in the last couple of years, we've had a couple of areas that then get the headlines versus the underlying momentum that we're driving. The step up in the Trump tax payments will finish in 2025. Mm-hmm. So we'll—2026 onwards, we'll—you can add $1 billion back to that underlying momentum. And we have had, as we have discussed in a number of calls, we've had the impact of the M&A divestitures. From an accounting perspective, the taxation on those comes through our free cash flow line. And similarly, the acquisition of fairlife. Mm-hmm A nd the mechanics associated with that acquisition mean it does likewise. But I think if I take a step back and I think about the broader picture, the business is the ultimate driver. Mm-hmm Over time. And if you were to just take out of the equation those couple of... three, actually, those three elements that are distorting this year and will have an impact next year, if you take those out, I think the underlying equation, driven by the strength, the ongoing strength of the business, is strong, and we think that this sort of couple of years that we have is very manageable. Okay. Through these years, has the volatility, to the lack of a better word, that we've seen, you know, around those underlying trends, and I apologize, I wrote some of those headlines, so around. It's okay. okay. I read your headlines. But has it changed your approach to capital allocation at all? And, you know, whether with respect to, you know, prioritizing debt paydown versus other things, how do you think about that? So I won't trot out to you the capital allocation priorities. Yeah because you know what they are. I think what is... If anything, what is changing or evolving is- Mm being willing to be a little more dynamic. Okay In from year to year, depending on the needs of the business. And so this year, for example, we have more CapEx in our numbers than I think people expected. But if you get underneath that number, a significant chunk of it is for growth. Mm-hmm. To invest for growth because of some of the finished goods business we have or some of the bottling businesses that we still have. So I think overall, the approach I certainly look at is: What does the business need to be able to capture the opportunities that the people running the business see? What is needed to continue to support the dividend, which is just so important for a big percentage of our share owner base. And then we've spent a lot of time over the last couple of years in constructing a balance sheet that's got what we need to deal with what we know is coming. Mm-hmm For potential opportunities that we don't have today on our radar screen, but which maybe I wouldn't want to miss out on an opportunity because we can't do it, and I don't feel that we're in that position. So I think the balance sheet work we've done has been very solid, and we are continuing to, I think, be very dynamic in making sure that the business gets what it needs to capture the opportunities out there. So yeah, no real. Yeah Fundamental change other than being a little bit. More nimble. Yeah. Yeah. Okay, I-- we're closing in on the end of time. I wanna circle back to, in some ways, where we started in terms of the mindset and the, for lack of a better word, cultural change that's taken place over the last, you know, three, four, five years. How deeply penetrated is that cultural change in the organization? As you-- is that still a struggle and an ambition to get more buy-in, or do you feel like you've hit the tipping point on that and now it's more full speed ahead? I think we've made a lot of progress, and we hear that bottoms up. But I think you've got to stay, you've got to stay a little, a little nervous. Mm-hmm You know, that you're not reaching the furthest possible point, so that you don't become bored with your own messaging or with how important it is for a broader organization at large to have on their cheat sheet the three things that they should be doing. Mm-hmm. It's a very different cultural environment, but one that requires constant nurturing. Mm-hmm. It's gotta be leader-led. It's gotta be leader-led. You know, we've all seen time and again the temptation to move on to something else. Mm-hmm. Or the temptation to conclude that my work is done, so I can, we can do less, or we can, as I say, get or get distracted by other things. Mm-hmm. So for me, as I go back to the outset, I think it's really important to sustain the ambition at the highest possible level, and through actions, not just words. It's... We have a very clear strategy as a system, and we think it can work for many years to come. Mm-hmm. You know, we're in an industry that's, at the end of the day, not as complicated as some. Mm-hmm. Sometimes our biggest challenge is to keep it simple. Execution sometimes doesn't get the attention it deserves. You know, being able to bring to life those core elements of value creation that we know can deliver value, but to be able to bring to life those elements better than you did last week and better than anybody else has done, is fundamental to this momentum continuing. Got it. We're almost out of time. I think everyone in the room knows The Coca-Cola Company. We've followed you for a long time. You've been around for a long time. But, for those who know but don't invest in The Coca-Cola Company, what would you say to them as to the primary reasons why they should? This is an outlier question. But I was going through my notes, Steve, from as we were getting ready for this week. I was going through my 2019 notes. Uh-huh. I called them up by accident, and I saw in those notes a comment that I was going to... I don't know whether I used at the time, to say that we're today, this is in 2021. Mm-hmm W e are selling 1.9 billion servings per day- Mm-hmm Globally, and today that number is 2.2 billion. Mm-hmm. So for people who don't know our company, I'd say, you know, the future is it has got unlimited potential. We have a sizable base that very few can, I think, hope to match, and we have the hunger, and I think the tools in place for me to come back in the next three years' time, let's say, with another 300-400 billion new servings per day, and that's a pretty compelling opportunity. I agree. Okay. Thank you. Thank you all. Thank you. Thank you, John. Thank you.