James Quincey: Good morning.
Christopher Carey: You made a comment on some private label switching happening in certain markets. Can you just expand on where you’re seeing this specifically geographically and perhaps by category and the playbook that you’ll be deploying in these markets, the sorts of developments that you’d be looking for to respond to these actions ahead? And I asked that a bit in the context of, clearly, some of your ingredients are still quite inflationary and whether you see any potential risk to being able to price against that inflation in some of these markets going forward. Obviously, you have a playbook with a lot of different levers. And I’m just curious to hear your thoughts on where these developments seem to be happening and how do you think about responding to these a bit more specifically. Thanks.
James Quincey: Sure. So private label switching is principally a feature firstly in Europe, and then to some extent also in the US. If you were to include price brands or B brands, you might see some of that also in Latin America depending on how you want to define it. But very specifically on private label, that’s number one, a European effect; and number two, a US effect. And it’s, in our view, highly related to the strength of the brands in any specific category. So we see it more in terms of beverages, happening in water and juices rather than soft drinks and certainly less when you get to colas. The strategy on top of what we need to do in terms of marketing and continuing to make the brands relevant to the consumers and executing in the marketplace is, of course, the RGM strategy.
Yes, premiumization remains an opportunity, but we need to keep an anchor and continue to evolve and adapt our strategies on affordability, whether that be refillables, whether it be affordable small packs or affordable future consumption packs, that has become something that is a tested strategy in inflationary environments, well learned in Latin America, for example, but now applied, has been for a number of years in Europe and in the US. And we have more things we can do in both marketplaces to have an anchor in both affordability and premiumization. And that’s a playbook that we’re rolling out and executing in those marketplaces. As it relates to the inflation and the COGS coming through, obviously, some of that, whether it be juice or sugar and corn syrup, affects different markets.
The most of the inflation is in a set of markets where we do price for local inflation. And in a way, the higher inflation gets, the more likely it is we’re just — you’re going to follow inflation. And so the risk not following is not really there as it goes up. The risk actually appears on the volume side. But this is a select group of markets. So if it were to err towards the more inflation in the back half of the year, we think it’s manageable. If we were to err for the less inflation, that would be good, but we think it’s in a bucket of manageable things. And as it relates to the total company relative to some of those input costs, we have very long-term relationships with most providers and long-term hedging programs, which allow us to kind of — they don’t avoid inflation, but they smooth it that they make it much more manageable from a pricing and packaging point of view.
Operator: Our next question comes from Filippo Falorni from Citi. Please go ahead. Your line is open.
Filippo Falorni: Hey, good morning, everyone. Can you guys talk a bit more about your alcohol strategy broadly, particularly with the Red Tree beverages subsidiary? And specifically in terms of like new innovation, any other subcategories or areas where you’re looking to expand within alcohol? I know you’re experimenting, but just any color on the future plans will be great. Thank you.
