Good morning and welcome to PepsiCo's 2025 Second Quarter Earnings question- and- answer session. Your lines have been placed on listen only until it's your turn to ask a question. Today's call is being recorded and will be archived at www.pepsico.com. It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President of Investor Relations. Mr. Pamnani, you may begin. Thank you, Kevin. Good morning, everyone. I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans, 2025 guidance, and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, July 17, 2025, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our second quarter 2025 earnings release and second quarter 2025 form 10-Q available on pepsico.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Jamie Caulfield. We ask that you please limit yourself to one question. With that, I will turn it over to the operator for the first question. Thank you, ladies and gentlemen. In order to ask a question, please press star one one on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star one one again. One moment for our first question. Our first question comes from Bonnie Herzog with Goldman Sachs. Your line is open. All right. Thank you. Good morning, everyone. I guess I was hoping for some more color on your accelerated productivity initiatives and your efforts to ultimately right-size your asset footprint. My sense is your business is built for faster growth. As we're seeing growth moderate, I guess you're understanding the need to shrink your asset base and attempt to mitigate the impact that you might be seeing from some deleveraged moving forward. First, could you quantify the productivity savings you're hoping to generate this year and how much above the typical $1 billion run rate it will be? Second, could you frame for us how you're balancing your reduced asset footprint with ultimately ensuring your business will still be built for growth over the medium-long term? Along those lines, how should we think about your long-term algo and realistic category growth? Thanks. Good, Bonnie. A lot of questions there. Listen, let me talk first about how we're thinking about productivity in a multi-year horizon. Then maybe Jamie can give you a bit more sense of the numbers. Now, we're thinking about productivity. You ask about Frito, but think about PBNA as well, or international business. Every one of those businesses have been optimizing their cost structure for multi-years. Now, we've been investing in technology. We've been investing in AI. We've been investing in data. Those businesses now have opportunities to improve even more their productivity as a standalone business. When it comes to the North America market, we have one new layer of opportunity that is going to give us a lot of opportunities to improve our cost structure over the next three, four years, which is the North America integration. We have two large businesses, almost $30 billion each, that have been operating almost a full value chain side by side. Now, with the investment we've made in technology, with the new data that we have and systems, we can start looking at those businesses in a more integrated way to perform some of the value chain tasks in an integrated way. With that, we create both efficiency and cost reduction, but also growth opportunities for the business in a combined way. Think about rural areas in the country. Think about how we service small stores or away-from-home restaurants. Think about some of those opportunities, how we lower the cost to serve. At the same time, we can increase frequency. We can increase time to sell. Those are standalone opportunities, combined opportunities as North America. The third layer is how we as a company have been investing for now multiple years in global capability centers around the world to service our businesses as one PepsiCo with one technology, with one set of processes, with one set of information. That is live, and that would also create a lot of value for our businesses going forward. Think about productivity not as a one-year event, but a multi-year opportunity for us to reduce our cost, invest in growth. Obviously, the food business in North America that you were referring to is one of the obviously businesses where we're looking at improved cost structure in the coming months and the coming years. Now, Jamie, maybe you want to talk a bit more about the details of the costs. Yeah. Hi, Bonnie. Yeah, in the second half, we're expecting to deliver about 70% more productivity than we delivered in the first half. Now, that's across the entire enterprise. Given the size of Frito in the portfolio and the particular need to right-size the assets and some of the other fixed costs, it skews more to Frito delivering that stepped-up productivity. What we're going after, I think we've mentioned in the past, we've closed two plants. We do have excess manufacturing capacity given the volume performance over the past couple of years. We want to be careful not to, to your point, take out so much that we don't have room to grow. We're being very intentional about this. Within our other manufacturing plants, we've shuttered some lines, but we can bring those back into service when volume returns. We're right-sizing the workforce. Over time, you can flex the workforce up and down depending on the volume growth. Beyond the fixed cost, addressing the fixed cost deleverage, we have got a lot of other initiatives in play. We have got the procurement savings. A lot of that is enabled by the investments we have made in the ERP system. We have got changes to our operating model where we are getting better leverage out of our management layer. We are going after everything: travel and expense. We are looking at third-party contracts. We are pushing on every cost lever that is available, and that is what is going to drive the incremental productivity in the second half. Thank you. One moment for our next question. Our next question comes from Steve Powers with Deutsche Bank. Your line is open. Great. Can you hear me? Yeah. Hi, Steve. Okay. Great. Hey, Ramon. If we stay on North America, but maybe pivot to the top line, both PFNA and PBNA, your prepared remarks run through a number of initiatives that you have underway to leverage the capabilities that you just talked about in response to Bonnie's question to drive improved momentum. I guess my question is, if there's a way to distill those initiatives down to maybe the top one, two, or three things that you would say are the most critical, the most important to get right as we run through the back half of the year to drive improvement. I guess relatedly, what does success look like as we think about exiting the year in both those divisions? Where do you want to be? Where does your outlook kind of assume that you will be in terms of the run rate exiting the year? Thank you. Yeah. Steve, hi. Listen, I'll give you a bit of a sense of what we're trying to do in the two businesses. Obviously, in the food business, our number one priority has been trying to stabilize the category as leaders in the category. We're always looking at the health of the category. We're trying to make granular investments in value, make sure that consumers stay within our brands, better entry points, better value every day. That has been successful. Also, obviously, we're trying to improve our competitiveness within the different subsegments of the category. We're happy at the progress in many of the subsegments of the food business. If you think about the performance of Cheetos in the extruded segment, if you think about the performance of Doritos in tortilla chips, if you think about our permissible portfolio becoming much more relevant in our overall mix, it's over $2 billion with brands like SunChips, brands like Popcorners, brands like Siete now, and the relaunch of Simply, which has been done now over the summer. We're getting very, very good positive results. There's still work to do in potato chips. We're very encouraged by the latest last two periods' performance in unflavored tortilla chips with Tostitos and the rest. First priority, make sure the category is stabilized. Second, improve performance in each one of the subsegments. Success in some, more success coming. As you saw in the prepared remarks, we're relaunching Lay's. It's our biggest brand. We're trying to elevate the real food perception of Lay's. If you think about the simplest and more natural snack, it's a potato chip. It's a potato. It's oil. And it's a little bit of salt, the most simple, no artificials as we go into the end of the year. Also, we're relaunching Tostitos because we think we can also elevate the food credentials of the brands. That's what we're going to be doing in Q4 and Q1. That's foods. Now, one element that maybe is not captured in Circana so much, but it's been the focus of the business for many, many quarters, now a year, is our away-from-home business. We've been putting a lot of emphasis on away-from-home. That's giving us a lot of incremental locations to the category. Our products and our focus is giving us very good returns, both in foods and in beverages. When it comes to beverages, the focus has been in improving colas. Colas is a good success for us. We've been focusing on the no-sugar colas. We've been focusing on food and Pepsi. We've been focusing on the taste challenge. Those three elements have driven positive share performance for Pepsi, which is something we feel very good about, not only in the U.S., but globally. The other big focus for us has been sports, making sure that Gatorade recovers share in sports. The first half of the year we're gaining share. Adding some new platforms to the functional hydration with Propel being a great success if you think about the last few years and how that brand continues to develop. Now, what would be success for us? Success would be sequential improvement of our top line, sequential improvement of our share of market performance with the goal to be back at the low end of our algorithm in top line over the next few quarters. That would be success. That is where we are really having a sense of urgency as an organization. All the businesses are improving all the operational metrics, are very focused on delivering that over the next few quarters. That is our goal. We will try to be there over the next few quarters. Thank you. One moment for our next question. Our next question comes from Filippo Falorni with Citi. Your line is open. Hi. Good morning, everyone. Ramon, I wanted to go back to one of your comments on the away-from-home, which is a bright spot, definitely in the results. Can you give us a sense of how big is away-from-home, both for the beverage side and the food side? You called out in the PBNA, it was up high single digits in the quarter. Should we expect that to continue in the balance of the year? Maybe also a little bit longer term, what's the opportunity longer term for your away-from-home business? Thank you. Yeah. Listen, away-from-home for us is a way, obviously, as consumers move their consumption patterns to more calories away from home, it is obviously an opportunity for us to create more occasions, accelerate growth in our categories, growth in our brands. It has been a focus for us for quite some time. It has been more of a physical availability effort. Now, we are adding layers of innovation, some other solutions that in terms of mini meals and some ready-to-eat solutions that we will talk to you in the future. That will be beyond physical availability. That is what we are trying to do. Now, it is very sizable. It is a bigger part of the business in beverages than it is in foods. It is margin accredited for both businesses. It is a higher margin business for both beverages and snacks in away-from-home than it is in retail. Growth opportunity, very incremental, a focus area, and margin accretive. You will see us talking about it more in the future. You will see us putting more resources against that channel. Also, as I said, having more innovation beyond what is the physical availability of our products in those channels. Thank you. One moment for our next question. Our next question comes from Dara Mohsenian with Morgan Stanley. Your line is open. Hey. Good morning, guys. Morning, Dara. Jamie, I just wanted to maybe extend Bonnie's productivity question a bit to full year earnings. Can you just help us understand your visibility and the assumptions behind the acceleration in the back half of the year relative to the first half? It's a pretty large magnitude. Obviously, currency is a big swing factor. That helps. I imagine a lot of that is eaten up by tariffs. Just trying to understand your level of confidence there, what the key drivers are. Is it mainly productivity, or are there other factors there? Also, just longer term, Ramon or Jamie, as you think about investing behind the business, I'm not hearing a ton about reinvestment on this call. Can you talk about the decision to sort of drop that to the bottom line versus reinvest behind the business? Obviously, some nice growth internationally, opportunity to continue to invest there. You're looking to drive better trends in North America, still below long-term goals from a top-line standpoint. Just curious how reinvesting behind the business fits into your plans and the ability to accelerate organic sales growth as we look out beyond this year. Darrel, I'll start on the confidence level with productivity. I'd put that at high. When you look at the phasing of this, as we've got into 2025, I would say it became increasingly clear that the external environment was going to be pretty challenging. End of Q1 into the beginning of Q2, we doubled down on identifying incremental initiatives to drive the ramp-up in productivity, which will start to accrue. The incremental productivity really accrues in the second half of the year. We've got all the actions identified, some we've already executed on. Very high degree of confidence there. On tariffs, we've factored that. Obviously, it's a bit volatile, but we feel good about mitigating actions that we've already taken. We have some other mitigants that we have under consideration. We've factored that into the back half. Yeah. When it comes to reinvestment, there are a few areas that we're obviously, first is technology. And we've been investing in technology for a long time. We'll continue to take a lot of our productivity, put it back into technology, as we obviously, that gives us additional intelligence and additional efficiency. That is one area. We're investing a lot in value. We're doing that, though, very surgically. I think we're getting better at understanding the return on the investment in value. Right now, our biggest investments have been in entry points, have been in everyday low price across most of the key categories. Then we're investing, as I was saying, in away-from-home. We're investing in building new capabilities so that we can drive physical availability outside of our retail channels and also innovation that will drive. Now, our A&M levels have been pretty high over the last five years. We've been putting a lot of A&M against the business or incremental A&M. We keep those levels going forward. I think the brands are sharpening their plans. We have better productivity as well in the A&M media space. We feel we have enough resources there to defend the core and also build some incremental platforms for growth. Those are the big areas where we're thinking about reinvestment. I think we've been driving the company for the long term since I started, and that continues to be the way. We're looking at the business, good levels of productivity to fund good levels of investment in the business going long term. Thank you. One moment for our next question. Our next question comes from Lauren Lieberman with Barclays. Your Your line is open. Great. Thanks so much. I wanted to talk a little bit about portfolio transformation. You've been pretty active on the permissibility side of things. You spoke about the Simply restage. I can tell you I've seen a ton of more incremental merchandising and display for the Simply lines in store. Yeah, a lot. I was just curious, I guess, first specifically how that's going. Because I know that on Simply, something that you've spoken about in the past is that the impediment was not having the products or making them available. It was, frankly, consumer engagement and interest in them. I'm curious on what kind of uptake you're seeing on that front. Also, in the release, you'd mentioned some upcoming innovation for Frito around fiber and protein and other things and ingredient profile. I was just curious if you've done anything in terms of consumer testing. Because when I think about the brand equities, I would think an open question is whether or not some of your brands have the right to play, if you will, in a space like protein, in a space like fiber, and just how you're thinking through kind of the risk of diluting brand equity by stretching them too far. Thanks. Yeah. That's a good question. The permissible portfolio in foods and obviously no sugar in beverages and some functional platforms in beverages have been a focus of the company for now quite some time. Permissible snacks, which is where your question was going, it's over a $2 billion business already. We're by far the largest permissible snacking company in the US with multiple platforms. SunChips, a very successful platform based around multigrain. We have Popcorners, more focus on baked, never fried. We have multiple now. We have Siete, obviously, as a new member of the family. Simply trying to address the no artificials and just natural in the big brands. Those platforms continue to grow. I'm very happy that you're saying you're seeing more physical availability of Simply. That was the bottleneck for consumption. It was not really consumer appetite for the product, but more availability of the product and the right affordability, the right price points that drive the trial. I think we've worked on both availability and affordability. That will drive trial. We're seeing increased trial in Simply. Those are great products that a lot of consumers that were kind of sitting on the fence of some of our large brands, Doritos, Cheetos, and Lay's and Ruffles, are now opting to come into the brand. Good feelings. That will continue to be a focus of our A&M, of our sales force, as you saw, and our customer plans. Now, going into the future, a couple of big innovation ideas. One is the relaunch of Lay's and relaunch of Tostitos. Those are two huge platforms that we want to elevate the real food credentials of the two brands. These are Anchor on Potatoes, Anchor on Corn, very traditional cooking methods on both, very simple ingredients, great food for our consumers. We will relaunch them. We'll put a lot of resources against. We'll eliminate artificial from those two big brands. That will happen Q4 and Q1 and then into next year. Yes, we're also in our remarks, we're talking about some innovation in more functional spaces with our food business. Yes, protein in some brands like Popcorners, some brands like the Quaker Snacks, and eventually in some of our larger brands. To your question, we've been very surprised, positively surprised, how consumers are seeing our brands expanding into those more functional spaces with credibility. We'll push hard. The big push to protein, though, is going to be on our beverage business, where we have some big launches coming up in Q4 and Q1. We will be participating in the liquid protein space with, I think, superior propositions that have no artificials, that are great tasting, and that I think will give us the return on what is clearly a consumer trend that is scaling up in the U.S., and it is part of the repertoire of our consumers. Those are the areas. We will obviously talk more in the coming quarters. It is a little bit early. We, obviously, for confidential reasons, competitive reasons, we do not want to disclose too much at this point. Thank you. One moment for our next question. Our next question comes from Michael Lavery with Morgan Stanley. Thank you. Good morning. Just maybe shifting gears a little bit to international, it has done quite nicely. Just maybe you gave some color in the prepared remarks, obviously, but hoping you could maybe call out a couple of the key drivers, just some of what is really working there. If there are any watch-outs for the second half or even opportunities for further acceleration, you can flag and just unpack that a little bit for us. Yeah. I mean, yeah, international has been a success story for us. It's been a focus of the company. Obviously, we're very developed in the U.S., and international is a big opportunity for growth, a lot of consumers, and a lot of opportunities for per caps and frequency build in most of the markets, developed and developing. We continue to invest in international, both foods and beverages. Both categories are doing well, mid-single-digit growth. That is where we're trying to continue balance of the year. That is what's in our guidance and our long-term, how we think about the business long-term. Yeah, in terms of specific markets, I would say we're very pleased with Latin America. We're very pleased with some parts of Europe where we see strength. We're pleased with some parts of the Middle East. China, a little bit weaker. As you think about the Chinese consumer post-Chinese New Year, a little bit softer. India continues to be a double-digit growth. Overall, I would say our business, strong competitiveness. We continue to invest in category growth, which at the end is the long-term driver of the business. The important thing for us is this was a business that had the profitability was below PepsiCo average in the past. Now it is accredited to PepsiCo. It is a very good investment opportunity for us. Thank you. One moment for our next question. Our next question comes from Peter Grom with UBS. Your line is open. Thanks, operator. Good morning, everyone. Ramon, I wanted to go back to your response to Steve's question on just what success looks like. I think you mentioned potentially returning to the organic growth at kind of the low end of the algorithm. Can you maybe just give us a sense in terms of your level of confidence or visibility into getting to that today where we sit today versus maybe where we've been over the last kind of 12 months? It sounds like you're more confident today versus where we've been. I'm not sure if that's a fair statement or not. If so, what kind of drives that improved confidence? Thanks. Yeah. The confidence comes from we see sustained international growth, and we see a sequential improvement of our North America business. When you put that together, yes, we should go back to the low end of our long-term algorithm, whether this is three quarters, four quarters, I do not know. I do not have a magic ball. Clearly, the business is working on this. We are becoming much more competitive in multiple subsegments of the category. We will continue to be very granular on our investments, continue to increase our productivity so we can reinvest back in value and portfolio innovation and the away-from-home business, which, as I said, is giving us a lot of great returns. We will continue to do that. Thank you. One moment for our next question. Our next question comes from Andrea Teixeira with JPMorgan. Your line is open. Thank you. Good morning, everyone. Ramon, you spoke about permissible offerings. I know how much effort the company has been putting into these offerings for a very long time. You are getting to $2 billion out of close to $27 billion-$30 billion in sales in North America for convenience foods. Assuming that includes also Siete, your acquisitions, why do you think, I mean, just as a step back, why do you think the consumer is searching for healthy snacks? This share of healthy snacks for you did not improve that much relative to what I think the consumer desire is. Perhaps in this high single-digit% of total, how can you kind of improve that as you go forward? Do you think that it's more of a form situation where you obviously have a massive market share, which, I mean, benefits you and obviously kudos to that effort in chips? I mean, the consumer is more looking for different forms. Perhaps the right to win is in forms like shakes or nuts or fruits or protein bars that you may not have. If that's the case, why not leaning towards more of that and perhaps requisitions? I just want to take a step back and think about strategically. Yeah. Yeah, Andrea, it's a good question. I think when you think about permissibility in our category, I would include, I mean, some of the levers we have, obviously, is innovation and portfolio, as you were referring to. A lot of the multiple choices that we're giving consumers. We'll give that platform or those platforms much more visibility and affordability because those were drivers that maybe we were not emphasizing enough in the past. Now, clearly, there is. Think about the other lever of permissibility in our category is portion control. I think portion control will be critical going forward. Our brands will be in consumer lives more and more, but in smaller portions. If you think about the efforts that we've been putting for many, many years now in building a multi-pack business, a variety pack business, a single-serve business, right now, over 60% of our volume in the US food business is in smaller formats. That will continue to grow. I think it's a great way for our brands to participate in what is a very healthy diet and improve the permissibility of our category in general. Think about permissibility probably in a broader sense. Obviously, it is an ingredient element. It is a cooking method element. It is a format and number of calories per serving. There are a lot of levers that we're playing because I think the number of occasions will continue to grow for our category. We want to participate in those occasions as on-the-go lifestyles will continue to develop. That is the long-term opportunity for our categories: participate on-the-go lifestyles with permissible solutions, affordable solutions that are in consumers' lives in multiple occasions. That is what we are trying to do. I am very optimistic about the growth opportunities of our food business. I am also extremely, obviously, optimistic about the growth opportunities in our beverage business, where clearly permissibility with no sugar offerings and the functionality of the category, both with hydration, with energy, with protein, is already more developed than it is in the food business. Thank you. One moment for our next question. Our next question comes from Peter Galbo with Bank of America. Your line is open. Hey. Good morning, Ramon and Jamie. Thanks for the question. Ramon, just going back through your comments on kind of sequential improvement expected in the food business over the rest of the year and maybe even in the next year, just maybe wanted to put that into context of Q3 in particular as you kind of lapse some of the promotional efforts from last year. The volume compare is a bit more difficult. Is it possible that we see maybe a step back in that volume trend before it reaccelerates or kind of how we should think about it there again over the course of the year? Thanks very much. Peter, I will not go into the details. My question was, PepsiCo will get to the low end of its long-term top-line algorithm in the next few quarters as a combination of international business continuing to perform at a very high level and sequential improvement in our North America business. Thank you. One moment for our next question. Our next question comes from Kaumil Gajrawala with Jefferies. Your line is open. Hey, guys. Good morning. Ramon, that was quite the tease on the big launch in protein. If there's anything you could add, I'm sure we'd all be interested. Is it an existing brand, new brand, any context? When I look at your comments in the opening remarks, many of the comments started with a focus on value as being responsible for this improvement in inflection. Could you maybe just talk about sort of the journey in offering more value, where you feel you are? Is there more work to do, or are things reset into a place that you like? Thank you. Yeah. Listen, with regards to the protein, I think protein is clearly a subsegment in our food and beverages categories that is growing fast. Consumers are adopting protein solutions in the diets at a pace that was not the case a few months back, a few years back. As we always do, we follow the consumer, and we're trying to offer consumer solutions, not small solutions, but solutions with our big brands because that's the beauty of our company. We can provide democratized solutions at large scale. That's what we're trying to do. You will hear more in due time. It's not too long from now. It's a few months from now that we'll obviously make more detailed announcements of our new platforms. On affordability, for sure. I mean affordability or you said value. Value has a number of dimensions, one of which is affordability, but it is also availability. It is variety. We pull on all of those levers. We expect to continue to innovate and change in response to how the consumers are defining value in the marketplace. We are able to do that. Our analytics are getting much sharper as we have invested a lot in data and IT. Yeah, we will continue to use value as a lever. Affordability, we are addressing with a lot more precision, by channel, by pack size, by time of the month. Thank you. One moment for our next question. Our next question comes from Robert Ottenstein with Evercore ISI. Your line is open. Great. Thank you very much. Just a couple of follow-up questions, if I may. Revisiting the international business, beverages did much better than food. Can you talk maybe a little bit about the drivers of why the beverages did so well? You mentioned Sting. I think for the first time that I can remember, I know it's an energy drink that's big in Southeast Asia. I think you got it from the Rockstar transaction. A little bit about your international strategy on the beverage side. A follow-up on the comments about North America and that integration. Is the integration that you're working on to such an extent that it would preclude any future consideration of refranchising, or would that be an option in the future, even with the integration? Thank you. Yeah. A couple of things. Sting is a brand that we created in, actually originated in Vietnam and now is available in multiple markets, in developing and emerging markets. It is part of our Formula One now sponsorship. It is a brand that we think, I mean, we know it has opportunities in many markets across our portfolio of markets. Now, beverages has been a successful story for us. We have been gaining share in multiple markets. Basically, we have three big platforms that we are focusing on. One is No Sugar Colas, No Sugar CSDs, but Colas in particular. No Sugar Pepsi has been an amazing success in many, many markets, in many markets around the world. We are leaders in Colas because of Pepsi No Sugar. The second platform is energy, and Sting plays a big role in that portfolio, but not only. We have other brands that are very successful in multiple markets. The third platform is hydration. In hydration, Gatorade plays an important role. Gatorade can grow meaningfully around the world. We are tweaking the American propositions to better fit the profile of international consumers in many markets. Those are the areas where also, I think, our bottlers are improving their performance. They are investing in their technologies and in their execution. There is a very good partnership between us and our bottlers. That obviously is resulting in better performance. We do not see any reason why this would not continue in the coming years. We have now a very dedicated organization, international beverages franchise, that is a great way of connecting end-to-end the whole world and making sure that we focus on the right platforms. We leverage platforms like Champions League, like Formula One, and others to create growth for long-term for us. The other point I'd make is on the international foods business. In a number of D&E markets, we have what I'll call some basic food products. They tend to be very heavy but low value per pound. They also tend to be pretty volatile. If you look at just our savory snacks within international and exclude those basic foods, the growth rate would be about four points higher. Yeah. When When it comes to North America, what I said earlier, this is a big opportunity for us. It is not available to many other companies to synergize two large operating businesses that are sitting side by side, servicing the same geographies, the same customers, and the same consumers. That for us is a huge idea to optimize how we do most of the tasks in our value chain, how we do this at low cost and a better performance. This will be our priority and where we will focus our efforts for the next three, four years to capture value and come out of this as a lower-cost business and better-performing business. Thank you. One moment for our next question. Our next question comes from Chris Carey with Wells Fargo. Your line is open. Hi. Good morning, everyone. I wanted to ask about PBNA. Actually, just in the context of the global beverage business. The President made some comments last night about ingredient changes or ingredient evolution in one of your competitors. It got me thinking in a way as how flexible is the system to responding to ingredient changes? I'm really asking this in the context of the prepared remarks talked about removing artificial flavors from a number of or ingredients from a number of food offerings. It really got me thinking about the beverage side and where you see this portfolio today and that kind of evolution toward healthier and cleaner ingredients and kind of how you see your North America versus international businesses on that journey of X% today. We think we can be at X% in the coming years in whether our North America international business. So it's really about the evolution of cleaner ingredients within your beverage portfolio and how flexible the system is to respond to those changing requirements. Thanks. Listen, same journey that we have in foods we're following in beverages. This is a consumer-centric strategy. We're following the consumer. If the consumer is telling us that they prefer products that have sugar and they prefer products that have natural ingredients, we will give the consumer products that have sugar and have natural ingredients. This is a journey of following the consumer, trying to be a little bit maybe one step ahead of the consumer, but not too many steps. It applies to both beverages and foods. In particular, we have a journey and a technical roadmap to eliminate artificial colors and artificial flavors from our beverages the same as we do for our food business. We will be able to execute as the regulations evolve or consumer preferences evolve. Thank you. One moment for our next question. Our last question comes from Kevin Grundy with BNP Paribas. Your line is open. Great. Thanks. Good morning, everyone. Thanks for taking the question. Ramon, I wanted to come back to North America beverages and energy drinks. It's an area we haven't spent a ton of time on, but it was certainly an area when you took over, you kind of drew a line in the sand, I think, if you'd agree with that characterization, say you wanted to see PepsiCo play in a more substantial way. I think Rockstar has probably proven to be a little bit more difficult of a turn, Kickstart, sort of same deal with Mountain Dew, and sort of difficulty gaining traction. I’d like to get your updated thoughts on sort of overall satisfaction with the energy drink strategy, kind of how you see the role of Celsius, potentially Alani Nu, not asking you to make any comments, of course, that you can't. Just looking out over the next three to five years, what would you share with investors? What would you share with the market? Success in energy drinks look like from a PepsiCo perspective? Thank you. Yeah. Listen, we continue to see energy as a large and growing category in our beverage business, and consumers are adopting those beverages in their lifestyle. I think that will continue. The way we're participating is multiple, right? We're participating in ownership of some businesses like Celsius, and we're also creating value by distributing some of those brands in the marketplace. That makes our business stronger with our customers, but also, obviously, we create value from our infrastructure and our assets. That's the way we're participating. On top of that, we have a JV with Starbucks that is very successful and that will continue to provide energy solutions, energy-plus solutions, not only energy in the coming years. That's another way how PepsiCo extracts value, both from the ownership of the JV and also, obviously, the distribution of those beverages in the marketplace. As the consumer evolves and there might be different spaces that get created, how maybe sports drinks and energy get combined in the future, we will be able to create as well solutions with some of our platforms that satisfy those needs for consumers. I think it is both from an innovation point of view, from an ownership of, in the case of the JV with Starbucks, or participating in the ownership of Celsius, and then obviously leveraging our vast distribution infrastructure for both away-from-home and for small format, basically, where these drinks get a lot of consumption and where a lot of value gets created, we will continue to participate. Think about our long-term value creation in energy, which I think is a long-term growth part of the category in that way. Yeah. Okay. Thank you. Thank you for a good call, and thank you for joining us today. As we were saying during the call, we're very pleased with our performance in Q2. Also, we have the right tools, and we're taking the right steps to deliver on the year and create a very stronger PepsiCo for the long term. We see a lot of opportunities for growth across our categories, and we're making the right investments to deliver on those opportunities. Thank you again, and have a great summer. Thank you, ladies and gentlemen. That concludes today's presentation. You may now disconnect and have a wonderful day.