Good day, and welcome to the Mondelez International Third Quarter 2021 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management in the question-and-answer session. In order to ask a question, please press the star key followed by the number one on your touch-tone phone at any time during the call. I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir. Good afternoon, and thanks for joining us. With me today are Dirk Van de Put, our Chairman and CEO, and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements of risk factors contained in our 10-K, 10-Q, and 8-K filings for more details on our forward-looking statement. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. We're also presenting revenue growth on a two-year CAGR basis to provide better comparability given the impact of COVID on 2020 results. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. In today's call, Dirk will provide a business and strategy update, then Luca will take you through our financial results and outlook. We will close with Q&A. With that, I'll turn the call over to Dirk. Thanks, Shep, and thanks to everyone for joining the call today. Q3 marked another quarter of high-quality top-line growth for our business. This result was marked by a continuation of the solid volume growth that we are used to, as well as higher contribution from pricing as we successfully executed pricing actions in multiple markets in light of the inflationary environment. Demand for our categories remains very strong across both developed and emerging markets. Within those categories, our market share remains higher than pre-COVID as a result of strength in execution, activation, and innovation. As you know, like the rest of the industry, we are currently operating in a very dynamic environment that poses multiple challenges. These include input cost inflation globally, as well as labor and truck shortages in markets like the U.S. and the U.K. We are taking the appropriate actions to navigate this, including further rounds of pricing and cost control. You will hear more on this in a moment from both myself and Luca later in the call. Despite the current operating environment, we remain focused on and confident in our long-term strategy of delivering accelerated growth through a virtuous top-line driven cycle, which requires continuous investment in our brands and our capabilities. Let me turn to slide five and the consumer. During Q3, consumer confidence stabilized in general, with a notable call-out of improved confidence in Western Europe, India, and much of Latin America as consumers are now more optimistic about job prospects and personal finances in those geographies. Mobility continues to rise, which provides a boost to gum and candy, as well as the travel retail channel. Both are expected to remain below pre-COVID levels at least through 2022. Ongoing uncertainty is fueling the desire for comfort and indulgence, which has been a consistent trend throughout COVID. Of course, this is benefiting trusted brand like ours. All of this means that our core categories are growing faster than they were pre-COVID, and that our portfolio, which skews towards in-home consumption, is benefiting. Demand is strong in developed markets, but especially so in emerging markets, notwithstanding a few smaller markets like Vietnam, which are suffering from continued COVID lockdowns. On top of all this, we have gained share during the COVID period. The elevated demand for our categories is contributing to price elasticity below historical levels. Consumers are willing to pay more for essentials or affordable treats as they spend less on eating and drinking outside the home. Let me spend a moment on the current operating environment on slide six. Like other companies, we are experiencing cost inflation globally, particularly on transportation costs and packaging, which are most pronounced in the U.S. Costs have moved higher in the second half of the year relative to the first half, and we expect inflation to persist in 2022. There is also an element of volatility in the supply chain due to labor shortages at third parties, combined with a significant gap between demand and supply of trucking capacity and containers in places like U.S. and U.K. In addition, there are energy shortages in China as demand has outstripped the supply of electricity in many areas. As you might be aware, we also had a strike at three of our plants and three distribution centers in the U.S. The strike is now resolved, but impacted our production output in the quarter. The good news is that the new contracts give us flexibility and unlock additional capacity to support our growth ambition. COVID-19 continues to cause disruption in certain geographies. This was felt most acutely in Q3 in Southeast Asia and resulted in a temporary closure of our factory in Vietnam, for example. Although challenging, we are managing through all these dynamics. We believe we are well equipped to continue to deliver against our objectives given the strength of our brands, our continued investments, pricing as necessary, and our focus on execution. Turning to slide seven, you can see that our strategy is continuing to drive a virtuous cycle, and the results support our ability to consistently deliver profitable, volume-driven growth, pricing as needed, and return of capital to our shareholders. We grew revenue by 5.5% in the quarter and 5%. Sorry, 5.1% year to date, lapping 3.9% growth in the first three quarters of 2020. Gross profit growth was impacted by cost inflation and supply chain volatility in Q3, but continues to be well over 4% year to date. Which we consider to be a very healthy indicator of our ability to deliver the high single-digit adjusted EPS growth that is part of our 2021 outlook and our long-term financial algorithm. Our year to date working media investments have increased double digits versus last year, combined with our advantage portfolio of brands and our execution and activation capabilities, mean that on a two-year cumulative basis, we are gaining or holding share across 75% of our revenue year to date. In terms of cash generation and capital return, we increased our year to date free cash flow by approximately $400 million versus last year, and we returned $3.1 billion of capital to shareholders. Adding the Q3 revenue growth to our track record of performance since launching our strategy in late 2018, you can see on slide 8 that we are now averaging a 4.1% quarterly growth rate. We believe we can consistently grow in line or in excess of our long-term algorithm of 3%+ based on the long runway of growth opportunities we show on slide 9 and the advantage enablers we have to realize them. These enablers include, for instance, increased brand investment, higher quality and purpose-led marketing, and pricing when necessary. This quarter, we continued to make progress against our key growth drivers. These include continuing on our journey to grow Oreo by $1 billion by the end of 2023 with activations like Oreo Pokémon, which became our fastest-selling edition of all time in the U.S., surpassing the previous records set by Game of Thrones and Lady Gaga Oreos. This also includes expanding our presence in key channels like digital commerce, which grew 25% this quarter on a reported basis, lapping 80% of growth in the previous year. Also emerging markets where we continue to gain distribution in places like China and India with another 120,000 and 80,000 stores added this quarter. Finally, this includes increasing our exposure to high growth segments where we are underrepresented. For example, well-being, where we announced breakthrough innovation this quarter on our largest brand with the Cadbury Plant Bar in the U.K., which is suitable for vegans, and our Oreo Zero in China, which has the clear potential to expand to other geographies. Turning to slide 10, let me update you on our sustainability journey. Climate change is a critical issue facing our planet, and we must do our part to help. We also know that if we want to deliver consistent long-term growth and shareholder returns, we must be a sustainable snacking company. For those reasons, we recently announced that we will take the necessary actions that we believe will allow us to achieve net zero emissions by 2050. This is a major target that applies to all greenhouse gas emissions across Scope 1, 2, and 3. This target also sees us join the United Nations Race to Zero campaign, as well as the Science Based Targets initiative, Business Ambition for 1.5 degrees. Where we are strengthening our position from our previous commitment of well below 2 degrees. We plan to deliver net zero by focusing on the highest contributors to our carbon footprint. In our case, there are raw materials which contribute 71% of our emissions. We will amplify our existing programs like Cocoa Life and Harmony in support of this, and we will focus on leveraging emerging low carbon technology at our owned operations. Alongside working towards net zero emissions, we will continue to advance all other pillars of our ESG agenda, including sustainable ingredient sourcing, diversity, equity and inclusion, and net zero packaging. We are excited to continue our journey to build a sustainable snacking company. With our proven strategy, our preferred brands, our executional excellence, our compounding investments, and our enhanced ESG agenda, I'm confident that we are well-positioned to deliver strong performance for years to come. With that, I will hand over to Luca for more details on our financials. Thank you, Dirk, and good afternoon. Our third quarter performance was strong across the board. We delivered top line strength, good operating profit dollar goal, including significant brand reinvestment and excellent free cash flow. Revenue grew 5.5%, underpinned by solid volume growth and pricing that we have been implementing to counter unprecedented cost inflation. Emerging markets continued with accelerated growth, displaying the resilience of our categories and strong execution. They grew more than 12% for the quarter and nearly 9% on a two-year basis. Our emerging markets results include double-digit growth in Brazil, Mexico and India, as well as high single-digit growth in China, Russia and Africa. These markets are attractive growth engines for us as consumer purchasing power continues to grow, as we fill white spaces, as we pursue distribution expansion and as consumers trade up. We continue to invest behind them in a big way. For the quarter, developed market growth remains solid at 2% with a two year average growth of 3%. Demand and consumption trends are robust in this market, albeit supply chain restrictions limited our growth, specifically in North America. Turning to slide 13 and portfolio performance. Biscuits grew 2.7% and more than 5% on a two year average. Brazil, Russia and Mexico posted double-digit growth, while India and China grew mid-single digit. Oreo continues to be a standout performer. Chocolate grew more than 11% with a two year average of more than 8%. India, Brazil and France grew double digits. The U.K. grew high single digits and Russia grew mid-single digits. Cadbury, Milka, and Lacta all delivered robust volume-led growth for the quarter. Gum and candy posted double-digit growth, resulting from a continued improvement in mobility. Moving to market share performance on slide 14. We continue to see good share performance. On a two-year cumulative basis, we have held or gained share in 75% of the business. Biscuits and chocolate held or gain in 80% of our revenue base. Notable share gainers on a two-year basis include the U.S., China, Russia and Brazil biscuit, and U.K., Australia, Russia and South Africa chocolate. Gum and candy held or gained in 30% of our revenue base, primarily due to gum performance in China, Russia and France. Although still below pre-COVID levels, this category continues to improve with mobility trends. Moving to page 15. Gross profit dollar grew 2% for the quarter, reflecting the acute impact of elevated inflation in commodities as well as transportation and labor costs in North America. While all other regions still face some inflation, they all display GP dollars growth in line with our expectations. In the short term, we have adapted our promo and trade deal spending to the elevated cost environment. As we expect these dynamics to persist into 2022, we have also taken and announced price increases across a significant number of markets. Of note, we announced a new round of pricing last month in the U.S., which will go into effect at the start of next year. Although cost pressures are not as high as in the U.S., we also have a robust pricing agenda for other markets too. We have implemented pricing in Brazil, Mexico, Russia and Southeast Asia, in addition to other business units. Our goal remains to enter 2022 with improved dollar profitability levels from this action to support the virtual cycle which funds continuous investment. Operating income dollars increased 4.5% due to strong overhead management and simplification initiatives. We continue to invest in A&C, which was up almost double digits in the quarter. On a year-to-date basis, gross margin has increased nearly 5% while operating income dollars have grown by more than 8%. A&C has increased double digits. Moving to regional results on slide 16. Europe revenue grew 4.6% in the quarter and 4% on a two-year basis. Organic dollars grew 4.5% versus last year, reflecting a strong virtuous cycle. North America grew 0.3% on top of 6.3% growth last year, resulting in a two-year average growth of 3.3%. Operating income declined 9.7% in the quarter. Overall, North America results were negatively impacted by service level constraints in the U.S., as transportation and labor shortages have impacted both costs and sales. These constraints are primarily impacting our external manufacturing and third-party logistics partners. We expect profit dollar growth to improve in conjunction with recently announced price increases across much of our U.S. portfolio that go into effect as of January first next year. For the quarter, the impact of the six-week U.S. strike was mitigated by a business continuity plan, which included increasing inventory levels ahead of it. Nevertheless, there will be an impact in Q4, which I will discuss in our outlook. AMEA posted growth of 5.7% and a two-year average of 4.9%, with broad-based trends apart from Southeast Asia, where COVID-related restrictions did impact our Q3. India delivered double-digit growth in the quarter, and China delivered high single-digit growth. AMEA operating income dollars grew nearly 8% while continuing to make sizable working media and route to market investments. Latin America grew 26% in Q3 and 14% on a two-year average. Brazil and Mexico both grew double digits, while dollars in Latin America grew double digits over prior year due to pricing and volume growth. Now turning to EPS on slide 17. Q3 EPS increased 9.4% at constant currency, driven primarily by operating gains, with year-to-date EPS increase of nearly 9%. Moving to cash flow and capital return on slide 18. We delivered free cash flow of $700 million in the third quarter, bringing us to $2.1 billion on a year-to-date basis. We also repurchased approximately $1.8 billion in shares in the first three quarters at attractive prices. I wanted to spend a quick moment on some of the significant improvements in our debt structure, financing costs and pension costs on slide 19. Since 2014, interest expense has been reduced by approximately 60%, despite an increase in total borrowings, with a current average rate of 1.7%. At the same time, we have extended our maturity from 7.7 years - 9.6 years. Similarly, pension funding has improved significantly in the recent years to 99%, driving material reductions in pension contribution requirements and costs. In September, we issued our first green bond, which was the largest to date in the CPG sector, enabling us to cost effectively fund our sustainability initiatives around cocoa, packaging, and our net zero carbon target. Let me spend a moment on slide 21 regarding the current cost and supply chain environment and our actions. The supply chain environment remains a challenge for us, like many others, with higher cost inflation as well as labor shortages at the third parties and strained transportation capacity. We have a well-established playbook to mitigate the impact of inflationary and supply chain pressures over time. This includes successful implementation of price increases as part of our RGM strategy, supported by the strength of our brand. We are also continuing in our journey of portfolio simplification to identify additional SKU reduction opportunities and to improve service levels and overall efficiency. In terms of our manufacturing network, we are taking actions to free up capacity with more flexibility in some of our plants and logistics networks. We also continue to execute our hedging programs of key commodities, which we believe have been effective, as you can tell by looking at our realized and unrealized mark-to-market gains this year. Overall, we're confident that these initiatives will allow us to offset the majority of the pressures we are currently seeing and will drive long-term profit dollar growth, albeit with some lumpiness given the cadence of pricing and input cost increases. Moving to our outlook on slide 22. We expect most of the trends that we have experienced in Q3 to extend into Q4, including robust demand for our categories and brands in both developed and emerging markets, continued transportation and labor inflation and supply chain pressure in our North American region, increased focus on Revenue Growth Management activities across a wider span of businesses, high level of reinvestment in our people, brands, markets and capabilities. Based on our strong results year to date, continued categories resilience and solid demand trends, we are raising our full year revenue growth outlook to approximately 4.5%. This implies Q4 growth of 3% or nearly 4.5% on a two-year CAGR and assumes approximately 1 point of top line headwind from the impact of the continued transportation and logistic constraint and the recent strike in the U.S. As the end market conditions remain fluid, this outlook does not reflect a material worsening from current environment. In terms of EPS, we continue to expect high single-digit growth for the full year, despite the initial pressure from commodities and transportation and labor dynamics in North America. We also expect free cash flow generation of $3 billion+. Forex translation is now expected to positively impact our reported revenue by 2 percentage points, and EPS by $0.09 for the year based on current market rates. One note related to our Simplify to Grow restructuring plan. We have extended the program by one year as we are still left with about $100 million of available funds that we plan to spend on high return supply chain and overhead related projects. The overall amount of the restructuring program is unchanged, so this does not change anything else in our outlook for this and next year. Our updated outlook is based on current conditions and does not factor a material degradation in the operating environment that could be triggered by a significant worsening of COVID-19 or supply chain restrictions. To wrap up, we are encouraged by the trajectory of demand for our brands and categories across our geographies. We are confident in our growth strategy and our ability to continue to execute against it going forward. This means balanced and consistent top and bottom line growth, continued reinvestment in our business, disciplined cost management, and strong free cash flow generation. With that, let's open it up for Q&A. We'll take a question from Andrew Lazar of Barclays. Your line is open. Great. Thanks very much. Two for me, I guess. First, Dirk, if you could talk a little bit more about key trends you're seeing in both emerging and developed markets and really the key consumer dynamics there. Then Luca, maybe if you could give us a bit more rationale behind the implied deceleration in 4Q organic sales growth, and then touch on preliminary expectations for 2022 on the top and bottom line. Thanks so much. Thank you, Andrew. Thank you, Andrew. I'll start, and then I can hand it over to Luca. Well, if I look first at emerging markets, they continue to be a major growth engine for us. In Q3, they grew double-digit. Year to date, they're growing double-digit. They're high single-digit on a two-year CAGR. Very strong volume growth, good pricing. Linking that to the consumer, I think what we're seeing is that the consumer confidence is improving in markets like India, big parts of Latin America. They're seeing the vaccine rollout. They're seeing life going back to normal. They feel better about their personal finances, and that is reflected in their consumption. At the same time, they still spend more time at home, which benefits our categories. Particularly the BRIC countries are very strong with a very strong double-digit growth in India and Brazil, and high single digit growth in China and Russia. The execution there in those four countries has been excellent this quarter. At the same time, looking in Africa, Poland, Pakistan, Mexico, they're all growing well. The only places in the emerging markets where we see some disruption is in some smaller markets, particularly Southeast Asia, where the COVID-19 cases were quite severe and there was serious restrictions. We talked about our plant in Vietnam being closed for three weeks, and so that has had an effect on Q3, but hopefully that will be temporary. On developed markets, what I would say, demand is strong, but it's a challenging operating environment, particularly in the U.S. We had big consumption spikes in 2020, particularly in the U.S. So far we're up 2% in revenue in Q3 and just over 1% year to date, lapping a very strong last year. If you look at a two-year CAGR, it's over 3%. That is well above where we were in 2019, where we were growing about 2% in developed markets. We see the consumer behavior where the consumer on average is spending 15% more time at home than before the pandemic. That is clearly benefiting our categories and our portfolio. Looking particularly or specifically at North America, it's growing well on a two-year CAGR, almost 4%, but declining slightly year to date versus last year. Again, 2020 was an extremely strong year for North America. The demand remains very robust in biscuits, but the service challenges in the second half, due to pressures on the logistics capacity, third-party labor, and the strike, which is now resolved, had an impact in Q3 and will continue to have an impact in Q4. Europe, we're seeing a very solid quarter, very solid year-to-date. The demand for our core categories is robust. We've got very strong year-to-date revenue growth for the U.K., for Germany, the Nordics. Mass retail, which is lapping strong growth last year, is still very good. Of course, we're benefiting from the recovery in convenience and travel retail as the consumer is regaining mobility. Maybe the other thing that I would say that we are in an inflationary environment. We've been increasing prices, and we plan to increase the prices more than we've done, at least in the time that I'm here, and probably for quite a while as a company. But what is good is that the elasticity levels are below historic levels and almost nothing to speak of. So that is helping the overall performance. Maybe over to you, Luca. Thank you, Dirk, and hi, Andrew. I'll start with revenue guidance. As far as revenue goes, I would simply say the business is fundamentally in a good place. You might have seen in the pages that we presented that chocolate and biscuit categories are vibrant. On a two-year stack, our share gains are very good. You might also have noticed that pricing contribution is increasing as you would expect, given the cost pressures we are facing, but also that volume is holding up quite well. We can also say that virtually all international businesses are positioned very well for both Q4 and 2022. However, in North America, obviously the six week strike predominantly, but also the volatility that Dirk mentioned, is putting some pressure on our supply chain, and that will impact the Q4 performance in a context where the market is fairly positive and demand is quite good. We estimate that mostly because of the strike impact in Q4, that there will be a one point of revenue pressure for the whole of Mondelez. To sum it up, Q4 is still going to be a good quarter, I believe, in terms of revenue when considering that there is the one-time strike impact. At this point, we feel quite good about top line and its momentum into 2022. From a profitability standpoint, we also feel good about the full-year profit outlook. In the end, I think you know that, year-to-date GP dollar is up by 5%, EBIT by 8%, and all in a context where we are increasing A&C double digits with overhead flat. I feel comfortable with our EPS high single digit guidance for 2021. Having said that, I have to recognize that there is some GP pressure in Q3, and that will persist into Q4 and partly into 2022. The pressure is due to commodity transportation costs and compounded, quite frankly, by some industry-wide supply chain constraints. North America is driving most of the pressure in the GP line in the quarter, and it is in fact the only region that declined GP dollars versus last year, with the others regions all above or close to our goal of 4% GP growth year-on-year. We are taking the appropriate actions to counter those cost spikes. We have recently announced a 6%-7% price list increase in the U.S., which will take effect in January 2022. We have also announced pricing in Q4 in Brazil, Mexico, Russia, Southeast Asia, Africa, and across Western Europe. We are leveraging our RGM, as we said many times, also going after productivity and general cost measures. We expect a sequential improvement versus previous years in the following quarters as more pricing kicks in. At this point, we believe that our 2022 EBIT growth will be solid through volume mix, pricing, obviously productivity, and we are still contemplating meaningful A&C increases at this point. 2022 from an EBIT standpoint should be on algorithm based on what we know today. Let's stay tuned because obviously Q1 will be a little bit more pressured, and we will provide more clear and comprehensive guidance in the next earnings cycle for 2022. Thank you. Thank you, Andrew. Our next question is from Nik Modi of RBC Capital Markets. Hey, good afternoon, guys. This is Filippo Falorni on for Nik. Hi, Filippo. Hi. I just wanna go back to your long-term guidance on organic sales growth of 3% plus. You've shown a slide that since the implementation of your new strategy, you've clearly delivered 4% organic growth pretty consistently and on average for several quarters now, and you just raised guidance for this year. I was just wondering about your confidence of delivering 4% consistently going forward and potentially raising your long-term organic sales growth outlook going forward. Yeah, maybe I'll start and, obviously Dirk can chip in here. Look, in the end, we see the long-term algorithm as a baseline. Our categories, if you look at historical levels, they have been growing 3%+. And that clearly is a good place to start from. We plan to gain share, so we should be always above the 3% mark, and that's really what drives this baseline. In the end, we are more focused on actuals than long-term algorithms. By executing well, obviously we aim at being closer to a number that is with four than with three. That's really the rationale behind the long-term algorithm. If there are some catalysts, namely some portfolio changes and more acquisitions, I think that will be the good opportunity for us to revisit the algorithm and declare formally that we aim at something higher than 3%+. I think you're right. In the end, the track record we have speaks for itself. We have been steadily delivering higher growth, and we plan to do so also going forward. Got it. Thank you very much. That's helpful. A quick follow-up. Your market share performance has been very strong in recent quarters and over the last couple of years. Some of your global brands, like Oreo, have done extremely well. Can you just talk a bit about your local brands and how they've been doing, recently and over the last year or so? Yes. Historically, our global brands have been growing faster than local jewels. We have been accelerating the growth of our local jewels and largely through renovations and activations. 2020 was different. There, our local jewels grew faster than our global brands because a number of our global brands were impacted by COVID-related changes in consumer behavior. Toblerone, for instance, because of travel retail decline, Halls because there was very limited cough and cold season, and then Trident because the gum category was impacted by reduced mobility. If you then look at 2021 year to date, global brands are now growing faster again than local jewels, but both are growing very strongly. Both are in the mid-single-digit growth. We're very happy with where our local brands are at this moment. From flat to declining a few years ago, they're now, as I said, mid-single digit. We continue to step up brand investment year over year, and we're gonna continue to activate more local jewels over time. We think we found the ideal balance and we continue to keep on going as we are. Great. Thanks, guys. I'll pass it on. Okay. Thank you. We'll take our next question from Ken Goldman of JP Morgan. Your line is open. Mr. Goldman, you may wanna check your mute switch. Your line is open. We'll move next to the line of Bryan Spillane. Your line is open, of Bank of America. Hey. Hi. Thank you, operator. Good afternoon, everyone. Hi, Bryan. Just two quick ones for me. One, just a follow-up on the commentary for 4Q, Luca. Just kinda listening to some of the puts and takes on the gross profit line. Are gross margins in the fourth quarter gonna be somewhat similar to what we saw in 3Q, or do you expect a further deterioration? Versus last year, they should be a little bit better. We should have a little bit less pressure. Remember, we are in some emerging markets, specifically implementing additional pricing, which went into effect in July, August. It should be sequentially better when compared to last year. Year-over-year. What about just sequentially? I think it was 38.3% in the third quarter. It's fourth quarter gonna be in that neighborhood? Yeah, it will be around that neighborhood, a little bit lower, most likely on a pure number. Oh, okay. From a pure number standpoint. Yeah. Okay. Dirk, just your perspective on, you know, the incremental rounds of pricing that you're taking, you know, to offset inflation, and I guess how it'll be different this time. You know, I think if we go back prior to your, you know, coming to Mondelez, you know, one of the issues was that there was quite a bit of pricing taken over time to protect or build margins. You know, it definitely had an impact on volume, on demand. I mean, it's a big part of what you came in to address and change in the time you've been at Mondelez. Maybe you could just kinda talk about how you've thought about that dynamic this time around and, you know, how it'll be different, maybe the way you're approaching pricing or just what's different about the ability to have some pricing power this time versus the last time Mondelez really tried to lean into pricing to protect or build margin. Yeah. I mean, in principle, what we're trying to do is the mixture between volume growth, pricing and mix needs to offset the inflation. That's how we think about it. On top of that, we have a whole productivity program which we use to increase our margins. It's different from the past in the sense that we are not as aggressive on pricing. We're not trying to build extra margin because of pricing. We're trying, through the mixture of those three things, maintain it as it is, and the extra comes from the productivity programs. The other big difference versus the past is that we continue to increase year-over-year our investment in our brands. First of all, our overall A&C pop, but then also how much we're shifting within A&C into working media. The worst you can do, I think, is increase prices and not increase your support for your brand. We've been supporting our brands now every year more and more. Our media pressure has significantly increased versus three, four years ago. We can see that the brand health is increasing. I think our brands are now more more susceptible to pricing, and the consumer should accept it better. Those are the two big differences, Bryan, versus what it was a few years ago. All right. Thanks. Thanks, Dirk. Thanks, Luca. Thank you, Bryan. We'll take our next question from Chris Growe of Stifel. Hi. Good afternoon. Thank you. Hi, Chris. Hi, Chris. Hi. I just had a question first. As we think about sort of planning assumption for next year as you have some strong pricing going into place, especially like in the U.S., do you model such that the elasticities remain very favorable, or do you expect the elasticities to be more like the historical average? If it's better than that and represents upside to your outlook, is that. I'm just curious how you think about that with what you're seeing with the consumer today. Yes. At the moment, what we are modeling is the historical elasticity. We have to take into account also that we know that the current elasticity we're seeing is better, so that would potentially be an upside for us. We also are using what we call RGM, Revenue Growth Management, which is a mixture of different techniques, if I can call it like that, and it's not always a straightforward price increase. If I look at the consumer, I think the main thing that's at work here is that consumer confidence is stabilizing, mobility is on the rise. They have an ongoing desire for comfort so they wanna snack, and they're spending more time at home. All that gives a very strong demand for our categories. Our categories are growing more, like 4% around the world, versus the 3% that we usually plan for. I think that is leading the consumer to almost have no elasticity at the moment. We hope or we think that that will remain quite a while. I think we don't wanna do that in our planning for next year, but we do believe that there might be better elasticity than what we're planning for at the moment. Okay. I have one other question in relation to North America. Just understand if you had any more detail on it, and if you gave this, forgive me if I missed it, but around sort of the costs around the strike. I know you talked about maybe some hits of revenue in the fourth quarter, and then I would contend that you shipped a little below consumption this quarter. Just understand kind of the effect on the business that we saw this quarter in Q3 from the strike overall. That's all I had. Thank you. Yeah. Yep. May-may- Go ahead, Luca. Yeah, maybe I'll take that. So on the strike, from a top-line standpoint, as we said in Q3, the impact is fairly muted. There was virtually no impact as we enter the quarter with relatively high trade stock. Given the elevated consumption, we have depleted that stock, and so there is an impact in Q4 that we quantify together with some other supply chain related issues at 1 point of revenue for Q4. From a cost standpoint, we have mitigated the cost impact. Obviously, all the puts and takes are slightly negative, but they are not meaningful on the total P&L profile for Q4. Clearly, some demand pressure. Some supply pressure will put a little bit of a cost strain on the value chain, and we will have a little bit of under absorption kicking in in the P&L in Q4. That's as far as it goes. Not material, I would say, overall at this point. Okay, great. Thank you. We'll take our next question from Alexia Howard of Bernstein. Good evening, everyone. Hi, Alexia. Hi, Alexia. Hi there. I have two questions. The first one is on pricing. It sounded as though you're getting the pricing in North America in early January, and yet you've been able to take pricing in a number of other regions earlier than that. I'm just wondering if there's something structural or procedural in North America that makes it harder or lengthier, longer, to take pricing here and just what if you have observations on that. My follow-up question is really around the net zero commitment. I remember a few months ago, I think there was a reticence to make that commitment that some of the other companies have made. Did something change? Did you get better visibility into how you might achieve that goal, or is it more about things are changing out in the world faster and therefore you've got to make that commitment and see where it takes you? Thank you. Yeah. Okay. You take pricing, I'll take net zero, Luca? Yes. Let's partner here, Dirk. Alexia, the simple answer is, we had a locked in, particularly on promotional activities, also given obviously some internal dynamics to our company, which we discussed. We had locked in promotional windows and promotional activities well before, you know, Q2. That bound us with our customers to a certain promo windows and certain promo activities. We thought that, rather than disrupting even further the supply chain, our preference was really to go for a full 100% price increase as of January first. There might be a couple of quarters of a dislocation, but I think, all in all, considering all the effects that we had internal and external, it was better for us to go, in effect, with pricing as of Q1 next year. Obviously, we will be extremely nimble here. We still don't know to what extent logistics costs will spike during the Christmas season and the holiday season in the U.S. If we see continuous cost pressure, at this point, we cannot rule out additional pricing waves. At that point, it will be more simultaneous to what we see than it has been, this last time. Okay. On net zero, the thinking was that we wanted to make sure that we have worked out as much detail as we potentially could. We were a little bit reticent in the past year to declare anything until the team had done their homework. They've been working quite hard. We've gone quite deep. I've been told that it's probably one of the deepest exercises in trying to understand how do you really get there. We were really wondering, A, will we get there? Can we make a plan that we can realistically believe in that it's doable? We wanted to know the different details step by step, what it means. If I summarize it a little bit, it is obviously a very significant announcement for us. It's really an acceleration and an extension of our existing initiative. It applies to all our greenhouse gases and the full supply chain, so scope 1, 2, and 3. With this, we are joining the UN Race to Zero and the SBTI Business Ambition for 1.5 degrees Celsius. If you look at our footprint, 71% of our footprint is coming from ingredients. The three big areas we need to work on is those ingredients, it's our own operations, and it's our logistics. If you think about it, in ingredients, that means that we need to continue and increase our investment in Cocoa Life. That's one of the big factors. We have a wheat program related to regenerative agriculture. We need to extend that. We need to make sure that our whole packaging approach is clear on recyclable, but also working on the recyclability and the use of virgin plastic over the years. We need to get into our operations, understand renewable electricity. We need to reduce food waste, which we've done quite significantly, but we need to do more, 15% in our own operations, 50% in our distribution, for instance. We need to change all our ovens. We need to change all our boilers and so on and so on. Then in logistics, we need to switch to electric vehicles, hydrogen trucks, work on our warehouse emissions, and change the efficiency of our networks, just to name a few things of what this means. The team has worked through all these details, and they've come up with a plan that is credible. It's not easy. We've also made a ten-year plan for the company, Vision 2030, which during 2022, we're planning an investor day around that. A ll the costs of net zero have been built into that plan, which is another thing that we wanted to make sure of, that we had the costs clear. That's why you felt in the past months we were a little bit sort of hesitant because we were working through this exercise, and I really didn't know, is this gonna all add up, and is it a plan that we can really believe in? I think we've come up with something strong that the company feels that we can deliver. It's not gonna be easy, but that's why we can make the announcement right now. Great. Thank you very much for all the color. I'll pass it on. Okay. Thank you. We'll take our next question from Jason English of Goldman Sachs. Hey, good afternoon, folks. Thanks for letting me in. Thank you for a good result. Thank you, Jason. Hi, Jason. Hey. A couple questions for me. First, the 6%-7% price increase in the U.S., is that weighted average? Is that what we should actually expect to see going, you know, or is it on partial portfolio damping effect? Anything we should be considering as we look to put pen to paper on our models? It is an overall net average price increase in the U.S. portfolio. We have announced it for biscuit and on average, that's the number. We are going with gum and candy as well. Halls will be a little bit later in the cycle, but all in all, it is gonna be very close to the 6%-7%. Got it. Okay. Sticking in North America quickly, the Simplify to Grow charges that are being backed out there are pretty substantial. I think roughly $330 million year to date, so really chunky numbers. Can you elaborate on what is all this expense that we're backing out? What is the expected return on all this investment? We announced early on in the year the closure of two plants. With all the activities we have been having around the reset of some of the U.S. network, that's really the biggest part of the cost in restructuring. That's really what it is at this point. The anticipated return or savings that you expect to be generated from that? Obviously, we have an internal rate of return expectation that is well in excess of cost of capital. You might imagine that, particularly as it relates to the two plants, we are gonna avoid fixed costs, as we go into next year. The return is gonna be on the high side. On top of that, the strike resolution did get us additional flexibility. It was a win-win for us and our employees, to whom we gave good benefits, I believe. Together with the avoidance of fixed costs, the additional flexibility, this program itself is gonna yield good returns. Excellent. Great stuff. I'll pass it on. Thank you. We'll take our next question from David Palmer of Evercore ISI. Thank you. Good afternoon. Wondering if you could talk about the third quarter gross margin decline. Your pricing was 3%. How much do you think was the impact of input inflation versus other factors like the supply chain inefficiencies in the U.S. and U.K.? I have a quick follow-up. Yeah, as I said, you know, in the end, when I look at really GP growth across the board for our regions, I feel quite good about what was accomplished across the European business, the EMEIA business, and the Latin American business. The pressure came really from North America. It is, quite frankly, mostly attributable to the logistics and transportation cost constraints that we have seen. We also have to acknowledge though that, particularly around some commodities like edible oils, et cetera, there has been some pressure. I would say the GP line pressure comes in Q4 mostly because of the commodity and logistics cost, and it is mostly attributable to the North American business. As you think going forward, pricing should really improve margins because I believe the cost severity in Q3 is quite high. It might go a little bit further in Q4 and into next year, but it cannot escalate, you know, proportionally the same amount, as we have seen in Q2 and Q3, in Q4 and into 2022. That's a little bit of color around the GP line. Just a quick follow-up to Jason's question about price increases in the U.S. Sounds like those announced price increases might add upwards of 1% to your global price number heading into the first half of 2022. Is that right? I'm just curious, for the entirety of 2021, for gum and world travel retail, you mentioned in your prepared remarks that you wouldn't get back to 2019 levels perhaps even into, you know, to the end of 2022, but that doesn't mean you can't get some of that back in 2022. How far below in 2021 were those businesses versus 2019? Thanks. Yeah, maybe I'll go with the first part, and Dirk can answer the gum and candy questions. Look, I think you know how big North America is in total for the company, and you have a sense of what a 6%-7% price increase would do. I think your math is in a ballpark right. Obviously the question is how is volume going to react? What we're seeing at the moment is that elasticities are more benign than they have been historically, but we need to see protracted price increases into next year, and we need to see what moving away from some price anchors will do to our consumers. That's a little bit the question mark at this point. As I said, though, for the totality of the company at this time, I see good revenue momentum going into 2022, and I see revenue being on algorithm for next year as well. On gum and candy, maybe first on gum and world travel retail. On gum, roughly, I would say gum dropped to about 65%-70% last year of what we was in 2019 because of mobility. I think for the total of 2021, it's gonna be roughly around 85%, maybe 90%, of where it was in 2019, and then we expect that it will close that gap in 2022. Now in the beginning of the year, the recovery was slower. Recently, we have seen an acceleration of the recovery of gum. We're talking about double-digit revenue year to date growth of gum and strong double-digit revenue growth in Q3. Year to date on a two-year CAGR, we're still negative high single digit. As I said, the recovery is going faster. We're starting to see some markets, particularly China and Russia, where we now have a positive two-year CAGR on gum. The emerging markets remain attractive for us and the question is really on the developed markets, which is only 2% of our 2020 net revenue. That's really where we expect the recovery to be slowest. As it relates to world travel retail, that dropped almost to zero, I would say. It was probably at 5% of what it was before the pandemic. This year, we will probably get back to, depending a little bit on what happens at the end of the year with travel, but maybe 65%-70%. Depending on what consumers decide to do as it relates to travel, that's the big unknown. We will for sure go up significantly next year, but I'm not quite sure that we will see the same amount of travel and as a consequence, buying on travel as we saw in 2019. That's still a little bit up in the air, but we will get close to 2019. I think gum will be all the way back. Remember, gum was growing a lot in 2019, so back but no significant growth. World Travel Retail close, but not completely, we think. Thank you. We'll take our final question from Pamela Kaufman of Morgan Stanley. Hi, good evening. Hi. Hi, Pamela. How are you thinking about the level of investment needed to support the strong top-line momentum that you've seen? Do you expect to increase brand investment further to support higher pricing? If so, can you talk about which categories and geographies there might be greater investment behind? Yes. I can talk a little bit about the principles and then maybe, Luca, you can go into more detail if needed. In general, we believe that we wanna outgrow our categories. To outgrow our categories, our brands need to have more visibility, more support, more innovation than others. We believe that that can be achieved with roughly, I would say, a 7%-8% increase year over year of our A&C investment. That fits into our long-term algorithm, where our expectation is that half of the 4%+ growth that we want in gross profit year after year, that half of that gets reinvested. Not all of that goes into A&C. Some goes into overheads, part goes into R&D. Overall, that's the thinking, and that allows for that roughly 7%-8% increase. It fits into the long-term algorithm. As it relates to pricing and increasing our investments, we're trying to maintain our algorithm. If we see we can get a better top line, we might do more flowing continuously at 50% back into investment. This year, as an example, we have a double-digit increase in our A&C year to date while we are doing the price increases that Luca talked about. The other movement that we're doing is within the A&C investment; we are moving more of the investment in working media. We've done that now for multiple years. The investments are really compounding. There is the increase in overall A&C and then the increase in working media within A&C. We have also made big strides on the quality, the effectiveness and the ROI of our marketing. If you talk about where do you want to do more, we have our local jewels, which we have given significantly more investment in the last three years, but we want to continue to do that more on the brands that we're already supporting and activate more brands. As it relates to markets where we would do that, probably some of the markets where we are underrepresented, largely emerging markets, that's where we think we should do the biggest increases of our A&C because we still have to support the category and really build the category for the longer term. That's how we're thinking about it. Not sure, Luca, if you want to add something. No, I think it has been a consistent theme, the one that, you know, we have been implementing in the company in terms of A&C investment. If I look back, I think since 2019, even despite fine-tuning the A&C line in 2020, given obviously COVID, we have been able to increase A&C, I think, versus 2018, by 25%, if you look between, again, 2018 and where we are today. Particularly on the working media, we have been improving quite a bit the situation about what we spend in that P&L line. I would also say the quality of our advertising and the mix of advertising is helping us improving the ROI quite a bit. I think that's one of the things that has made the model more sustainable for us. I think when you look at volume growth, share gains, there is a strong linkage with these investments we have been making in global and local brands. Great. Thank you. Can you just give an update on the white space opportunities that you're targeting and how you're leveraging the recent acquisitions to address these opportunities? Sorry. Yes. The white space opportunities for us are. I mean, if you look at our building blocks for growth, the first two are pretty straightforward. It's make sure our categories keep on growing. We're big players in our category. Our category growth depends partially on us. Second, continue to increase our market share, and that gives us a bigger growth. Third, there is the channel expansion that we can do. We are not having the same market share in all channels. Thinking about for instance online or digital commerce in the more developed markets. But we're also talking about numerical distribution in emerging markets. As I was saying in the prepared remarks, we're increasing our presence in China by 120,000 stores, in India by 80,000 stores this quarter alone. On top of that, there's high growth segments within our categories. I'm thinking about well-being, thinking about premium, and those are some of the areas that we are underrepresented and that we should be really launching new products in there and using some of the acquisitions that we've been seeing to get in there. For instance, Grenade or Hu would fit in this category. Then we have geographic white spaces around the world, countries where we are not yet that present. We haven't done that many yet. Although an acquisition like Chipita, which largely plays in Central and Eastern Europe and some of the other emerging markets, obviously will reinforce our presence, but they're largely in the same countries as we are or where we already have a smaller presence, but they certainly will give us more critical mass. The last one is the close-in adjacencies, which are the bakery and the bar segment. Chipita fits or Give & Go fully fall into that sort of growth opportunity that we have. That's the last white space. It's between channel, high growth segments, geographical white spaces, and close-in adjacencies. Those are the four big white spaces that we have. Thank you. This does conclude our Q&A session. I'd like to return the call to you for any concluding remarks. No, I think we've come clearly to the end. Thank you for your interest in the company. Happy to reply to more questions. Please contact Shep and Andre, and we will do whatever we can to help you out. Looking forward to talk to you at the end of the year to give you a full update of where we've ended 2021 and give you our guidance for 2022. Thank you. Thank you. This does conclude today's Mondelez International Q3 2021 Earnings Call. You may now disconnect. Everyone, have a good day.