Charlie Higgs: I’ve got a question on BIG and the Philippines. And James, maybe can you just talk about the Philippines high level, how the country has performed? And I guess, from a transaction, why now and why CCEP? And then, John, can you just give us some thoughts on what the transaction could mean for FY ’24 outlook if it does go ahead, maybe the sales margin, EPS? And then maybe just comment when you said a portion of proceeds from non-operating activities may go towards buybacks, is that — should we read that as BIG disposals?
James Quincey: Sure. Let me start there, Charlie. We have a clear stated objective that we want to be the world’s smallest bottler and so over time have been refranchising the operations. We currently hold basically 4 pieces: the Philippines, a large-stage CCBA, a significant part of the system in India and then a number of — a small number of other countries, about 1/4 in each in rough terms. And so we are long-term, refranchises of the bottling operations we own. In terms of the Philippines, we’ve had actually a good set of recent years in the Philippines, a good bounce back notwithstanding some ups and downs, given availability or as I said, lack of availability of some critical commodities in the marketplace. But actually, overall, we’ve had a very good run in the last number of years.
And so we’ve been looking for the right time and the right partners to refranchise to. I think most importantly, this is a combination of a strong, local, long-term investing family, the Aboitiz Group together with some system expertise coming from CCEP. So, I think it’s the right combination of partners that can bring bottling expertise and knowledge of the Philippine market — Philippines market together to continue the track record of what’s been achieved. John, do you want to do the other pieces?
John Murphy: Yes. So on the transaction stuff, Charlie, we’ll guide in February, assuming that the deal closes. It’s — we’re making great progress on that at the moment. And without giving specifics, as you know from history and it will have a revenue headwind and a margin tailwind. And specifics, we’ll give more details in February. And with regard to your last — the last part of the long question, I would say the following. One is we have, I think, developed a strong position and created flexibility, given the momentum we have in the business, the stronger balance sheet we have today versus a few years back and the fact that we do have proceeds coming in from non-operating sources, i.e., the bottler refranchising primarily.
We continue to be very focused on reinvesting in the business and returning capital. And as we look at some of these proceeds coming in, we will evaluate their best use, including share repurchases beyond the current objective we have to cover dilution. So more to come on that in February.
Operator: Our next question comes from Bryan Spillane from Bank of America.
Bryan Spillane: I had one just clarification and then a question. The clarification is, did you give us how much hyperinflationary pricing affected just the total price/mix at the total company level?
James Quincey: No, we didn’t give a precise number but it’s about 2.5 points. It depends which countries you want to add in and where you want to cut the line but think of it as about 2.5 points in Q3.
Bryan Spillane: All right. And then my question is just about North America. I think in the press release, unit case volumes were flat and you called out that you had gained share. And then, James, I think in your prepared remarks, you talked about away-from-home growing faster than at-home. So can you just sort of give us a little bit more perspective on kind of what’s happening in North America in terms of both in the relative channel performance, anything you may be seeing in terms of value-seeking behavior with consumers? Just trying to get a better understanding of kind of how your business performed and just kind of what’s happening with the category as we got through the quarter.
James Quincey: Sure. Firstly, let me start by saying the Nielsen universe represents just under half of our business in the U.S. So the measured channels are just under half of the total business. And what’s happening in the consumer landscape is in kind of simplifying it down, the lower-income consumers are those most under pressure and the shopping occasion that’s most under pressure is when they’re buying for at-home. And so that is the business most captured by Nielsen. And the bit of the marketplace where there’s more growth is when consumers are away from home. So there’s still very — still a rebound and strong growth in away-from-home channels, not just some of the restaurants but the amusements, travel, leisure, hospitality, those things.
So you’re seeing more growth in that part of the marketplace which is unmeasured. And so that’s what’s really driving the strength of the U.S. business overall and the revenue side. And so you see kind of a divergence of the consumer behavior between at home and away from home. Obviously, who’s under pressure from a disposable income is clear. And then that feeds through into kind of the observed measures channels versus the total overall marketplace.
Operator: Our next question comes from Peter Grom from UBS.
Peter Grom: So I kind of wanted to follow up on Bryan’s question there. I mean, James, you mentioned trade down to private label and discount channels in your prepared remarks. But I think you also mentioned that relative to 2Q, the impact was similar in Europe but actually less pronounced in the markets like the U.S., Australia and Japan. So I would love just to get your perspective on why you think it was less pronounced in those markets? And then as you look out to 4Q and ’24, how do you kind of see this trade-down dynamic evolving?
James Quincey: Okay. So I think — look, the European consumer is under slightly more pressure than the U.S. consumer from a disposable income point of view. That’s the starting point. So I think that’s why you see a little more trading down or tightness on basket size in Europe versus the U.S. And I think that’s generally overall true. And then the question of which categories are most pressured by that is really about brand strength and prioritization of occasions by the consumer. So if you’ve got to save money, you don’t trade down averagely across everything, you make a choice in certain categories and you preserve your choices on other categories. So very much our objective is to make sure they value our brands so that they make the choices in the shopping occasion.
If there is going to be a reduction in total spend, that obviously happens in some other categories when they trade down to the private label in those ones. And we preserve our brand strengths because we deliver value for them in the product, in the marketing and innovation. And so that’s the overall dynamic as we see it. And that’s the difference between the U.S. and Europe.
Operator: Our next question comes from Filippo Falorni from Citi.
