Keurig Dr Pepper : Transcript (Keurig_Dr_Pepper_First_Quarter_2024_Earnings_Transcript)

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PRESENTATION

Operator

Good day, and welcome to the Keurig Dr Pepper first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the "*" key followed by "0."

After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press "*" then "1" on a touchtone phone. To withdraw your question, please press "*" then "2." Please note this event is being recorded. I would now like to introduce the company's Vice President of Investor Relations and Strategic Initiatives, Jane Gelfand. Please go ahead.

Jane Gelfand

Thank you, and hello, everyone. Earlier this morning, we issued a press release detailing our first quarter results, which we will discuss during this conference call. We have also added a slide presentation to our earnings materials. The slides accompany our prepared remarks and can be tracked in real-time on the live webcast. They will be archived on our IR website afterwards.

Before we get started, I'd like to remind you that our remarks will include forward-looking statements, which reflect KDP's judgment, assumptions, and analysis only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting KDP's business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to our earnings release and the risk factors discussed in our most recent Forms 10-K and 10-Q filed with the SEC.

Consistent with previous quarters, we will be discussing our Q1 performance on a non-GAAP adjusted basis, which reflects constant currency growth rates and excludes items affecting comparability. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings materials.

Here with us today to discuss our results are Keurig Dr Pepper's Chairman and CEO, Bob Gamgort; incoming CEO and Chief Operating Officer, Tim Cofer; and Chief Financial Officer and President, International, Sudhanshu Priyadarshi. I'll now turn it over to Bob.

Bob Gamgort

Thanks, Jane, and good morning, everyone. It has been a busy and exciting start to the year at KDP. First quarter performance was strong with solid consolidated sales growth and double-digit EPS growth. Momentum in our U.S. Refreshment Beverages and International segments remained healthy, and U.S. Coffee results showed meaningful sequential recovery. We invested in marketing and capabilities across the business, while also delivering attractive, broad-based margin expansion. The strong start to the year enhances our visibility to an unchanged, on- algorithm 2024 growth outlook.

In Q1, we also advanced several strategic initiatives that position the company for multi-year success and demonstrate our confidence in the value creation opportunity ahead. First, we unveiled a revolutionary future vision for the Keurig brewing system, that has been years in the making. When launched, our new, proprietary K-Rounds plastic- and aluminum-free pods and Keurig Alta brewers will enable consumers to brew a wide variety of hot and cold barista-style beverages from a single machine, using a pod that can be easily and sustainably disposed. This system has the potential to redefine how consumers brew coffee for decades to come, and we

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are excited to begin beta testing, later this year. At the same time, we are committed to growing our pre-eminent, existing K-Cup system, including through a strong slate of innovation in 2024.

Second, in Q1, we also took advantage of a highly compelling and dislocated stock valuation, by executing a $1.1 billion dollar buyback of 38 million KDP shares. This was our largest quarterly share repurchase in our history. We have progressively increased our buyback activity over the past several years and, with another $1.8 billion dollars remaining on our authorization, we intend to stay opportunistic, when we see attractive value in our shares.

Third, we introduced our evolved enterprise strategy, which we unveiled at an investor day hosted last month. This strategic framework combines many of the philosophies and practices that KDP has developed over the last five years with new elements intended to drive strong and self- reinforcing growth in our next chapter as a public company. Many elements of this strategy were already evident in our first quarter results.

Finally, this morning we announced that Tim has been appointed KDP CEO and will join our Board effective tomorrow, marking the culmination of a robust transition process that began when he joined us in November. I have worked closely with Tim over the past several months and have seen firsthand how our company is benefiting from his deep and diversified CPG experience, strategic vision, and personification of our Challenger culture. I look forward to continuing to partner with Tim and the broader leadership team in my ongoing capacity as KDP's Executive Chairman and could not be more confident in their stewardship of the company's next chapter. With that, I will turn the call over to Tim.

Tim Cofer

Thanks, Bob, and good morning, everyone. Let me start by once again expressing my appreciation to Bob and our Board of Directors for the honor and privilege of leading this dynamic company into the future. I'm energized to partner with our 28,000 colleagues across the globe to build on KDP's strong track record and to guide our next chapter of growth and value creation.

I see a tremendous amount of upside ahead. At our recent investor day, I shared the many elements behind my conviction and discussed how we intend to unlock this future opportunity. If you've not yet had the chance, I would encourage you to watch the replay of that event.

As Bob mentioned, we recently introduced an evolved strategy, which is anchored by five strategic pillars. These are effectively a roadmap to guide each of our employees' actions every day, and it includes directives to; Champion Consumer Obsessed Brand Building; Shape our Now and Next Beverage Portfolio; Amplify our Route to Market Advantage; Generate Fuel for Growth; and Dynamically Allocate Capital. This strategic framework will guide our company over the next few years and is designed to deliver a sustainable cycle of growth. Each element of this strategy featured in the first quarter, which represented a strong start to the year.

Net sales growth accelerated sequentially, with continued momentum in U.S. Refreshment Beverages and International and meaningful progress in U.S. Coffee. Gross margin expanded significantly, driven primarily by robust net productivity, which funded reinvestment to support our future growth and drove strong earnings growth in the quarter. And we flexed our capital allocation priorities toward direct shareholder returns, taking advantage of a unique opportunity to efficiently repurchase a large number of shares at an attractive valuation. Overall, our first quarter performance demonstrates the health of our business and provides enhanced visibility to our unchanged full year outlook for mid-single digit net sales and high-single digit EPS growth.

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Taking a closer look at the intersection of strategy and Q1 results, we were encouraged by the quarter-over-quarter acceleration in net sales growth to nearly 3%. Though top-line momentum remained pricing-led, volume/mix improved to nearly flat, following declines during 2023. Consumer-led innovation, leveraging our comprehensive demand space framework, was an important contributor to this improvement.

Here are two quick examples: In U.S. Refreshment Beverages, we launched Canada Dry Fruit Splash, a flavor extension of our second largest CSD brand. The innovation is performing well during the early launch phase, proving incremental to the Canada Dry franchise and driving market share gains. In International, we introduced Schweppes Mocktails as the first canned mocktail product in Mexico, securing distribution with several large customers and generating very strong initial consumer acceptance. The launch is already exceeding our plan and we have yet to turn on the advertising.

Innovation activity ramps across our portfolio in Q2 and we're excited to build on our initial momentum as we move through 2024. Our top-line growth during the first quarter also reflected the continued successful execution of our partner strategy. Electrolit sales and distribution commenced in the quarter and La Colombe ready-to-drink beverages are now ramping through the system, with smooth distributor handovers and early traction. C4 Energy also continues to grow strongly, and we achieved further key performance milestones in Q1. DSD execution is a key enabler to this success, and we continue to invest to drive greater efficiency throughout the system.

Improving first quarter trends in U.S. Coffee owned & licensed brands, illustrate our commercial and route-to-market effectiveness. Our owned & licensed market share began a recovery, which steadily strengthened throughout the quarter. Distribution growth, increased display activity, price gap management, and increased marketing all contributed, and this better trajectory has sustained quarter-to-date with more high-quality activation to come later this year.

Total KDP gross margin expanded 350 basis points in the first quarter and gross profit dollars grew approximately 10%. This strong performance reflected an enterprise-wide focus on productivity, which yielded meaningful benefits during the quarter and more than offset persistent inflation, as well as the benefit from an additional C4 performance incentive.

Our gross profit progress provided important fuel for growth, funding reinvestment, including a double-digit increase in marketing, and also contributed to the very strong bottom-line results in Q1. Specifically, operating income grew an impressive 17.5% year-over-year and Earnings per Share advanced 12%, ahead of our in-going expectations.

With top-line momentum expected to build from here, I'll now spend a few minutes discussing each of our segments' Q1 net sales performance and why we have confidence in the balance of the year. Let's start with U.S. Refreshment Beverages. Revenue momentum remained healthy, with mid-single-digit net sales growth in the quarter. Our performance was led by solid growth in CSDs and our expansion in energy and sports hydration, partially offset by softer trends in certain still beverage categories.

As anticipated, segment growth moderated from Q4, as we lapped year-ago pricing measures and due to innovation timing, which phases later in 2024, when compared to 2023. In Q1, we anniversaried the launch of Dr Pepper Strawberries & Cream, which was a standout success and went on to become the #1 CSD category innovation of 2023.

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Looking ahead, we expect an exciting 2024 innovation and brand activation slate to drive a larger sales contribution in future periods. Our Dr Pepper Creamy Coconut limited time offering is launching as we speak, just in time for the summer season, and it capitalizes on the popular "Dirty Soda" social media trend. The complete restage of Bai Wonder Water is just beginning to roll out, and our Core Hydration partnership with U.S. Gymnastics will be activated during the Summer Olympics. We expect these collective activities will have a larger impact in the back half. In addition, our partnership with C4 should continue to enjoy good momentum and our sales and distribution of Electrolit will build over the course of the year.

While the magnitude of overall U.S. Refreshment Beverage pricing should moderate going forward, as we increasingly anniversary year-ago activity, some modest incremental pricing across CSDs was announced earlier this year and will contribute to growth. We also continue to optimize price pack architecture to fit consumer needs across the portfolio and various channels.

Moving now to U.S. Coffee. As expected, net sales strengthened considerably relative to the fourth quarter and decreased at a more modest low-single-digit rate in Q1. Notably, volume/mix was basically flat, improving from a high-single-digit decline last year. There were a number of "green shoots" in the quarter for U.S. Coffee.

Let me outline five key elements that bolster our confidence in continued top-line recovery in the segment. First, our pod shipment trends improved sequentially. Though at-home coffee category consumption growth remains muted, the trend modestly recovered relative to Q4. More importantly, Keurig's own volume momentum accelerated throughout the quarter.

Second, our owned and licensed brand market share momentum is building, which is a mix- accretive trend. In Q1, we grew owned and licensed total distribution points at a double-digit rate, we increased display activity, and supported our brands with higher marketing. In addition, we made tactical adjustments to appropriately align our promotion strategy. This is already having an impact and will allow greater innovation, marketing, and activation to shine through in the balance of the year. Owned and licensed share momentum progressively strengthened throughout the quarter, and we expect the trend to continue, supported in part by upcoming price-pack architecture changes to strengthen the value proposition.

Third, within the coffee maker category, Keurig and Keurig-compatible brewers also continued to gain share in Q1, extending a multiyear track record of outperformance. An exciting innovation, like K-Brew + Chill, which has not yet launched and will hit retailer shelves later this year, should further support our performance.

Fourth, as our volume in U.S. Coffee improves, so does our ability to manufacture at a more attractive cost profile. We generated strong productivity during the first quarter, which drove healthy segment margin expansion and funded reinvestment. We're also beginning to optimize our manufacturing footprint to favor high efficiency locations like Spartanburg, where capacity is ramping and unlocking further network optionality, which should also generate fuel for growth.

And finally, fifth, the Keurig partnership proposition remains very strong, as evidenced by multiple recent brand additions to our ecosystem. Lavazza will transition from a partner to a licensed brand during the second quarter. Also, in Q1, we reached agreements to welcome Brooklyn Roasting Company, Shark Tank-favorite Kahawa 1893 Coffee, and Canadian super-premium brand Kicking Horse to our roster. And, just this morning, we are announcing the addition of Black Rifle Coffee as a new partner. Black Rifle Coffee's success in the coffee industry is already well- established and their decision to evolve to a Keurig system partner speaks to the full value

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proposition of our stewardship of the single-serve category. Our La Colombe ready-to-drink coffee partnership is yet another proof point and is just now beginning to scale. In total, these exciting partnerships will begin to contribute to U.S. Coffee segment volume growth, later in 2024.

Moving on to International, which is becoming an increasingly significant part of our business and is a core part of our strategic agenda. The segment's strong sales performance continued into the first quarter, with high-single-digit growth on a constant currency basis and broad-based strength across categories and markets.

Our cold beverages portfolio performed particularly well in Latin America, reflecting continued strong DSD execution. Performance was led by our powerhouse Peñafiel brand, which continues to enjoy strong base momentum even as we extend the brand into new adjacencies. For instance, we recently launched Peñafiel soft seltzers, which offer sparkling mineral water with a refreshing touch of flavor, no calories, no sugar, and with 100% natural flavors.

We also further grew our segment presence in the low- and no-alcohol alternatives category, with continued share gains for Atypique in Canada and strong retail and consumer reception for our launch of Schweppes Mocktails in Mexico. In our Canadian coffee business, market share grew for Keurig brewers and for our owned and licensed pod portfolio, led by the Van Houtte brand.

As in the U.S., we continue to strengthen our international route to market, and earlier this month we announced a multi-year partnership with the Toronto Blue Jays for pour rights at their ballpark. We're excited to expand Canada Dry, Dr Pepper, Clamato, Crush, and Atypique within the on- premise channel and will continue to seek out opportunities to thoughtfully build the distribution of our brands outside the U.S.

In short, we're pleased with the promising start to the year. We demonstrated sequential top-line progress in the quarter and delivered broad-based growth in Adjusted operating income and margins across our segments. We did this while simultaneously funding high-quality reinvestment in our brands and capabilities. Sudhanshu will speak more about our margin progress and our intention to continue balancing growth and reinvestment in the coming quarters. We're confident this approach will reinforce our 2024 outlook for on-algorithmtop-andbottom-line growth, which remains unchanged, while also powering a virtuous cycle of growth over a multi-year timeframe. With that, I'll turn the call over to Sudhanshu.

Sudhanshu Priyadarshi

Thanks, Tim, and good morning, everyone. Our Q1 results were strong, demonstrating sequentially improving net sales growth, continued meaningful gross margin expansion, and incremental investments in marketing and capabilities. With EPS ahead of our plan, we intend to use Q1 upside as additional fuel for reinvestment, to support revenue growth over the balance of the year and as buffer against pockets of reemerging commodity inflation.

First quarter net revenue grew 2.8% in constant currency. Healthy momentum continued in our U.S. Refreshment Beverages and International segments, and we are encouraged by the sequential top-line recovery in U.S. Coffee.

On a consolidated basis, we realized positive net pricing, up 3.1% year over year. This was driven by favorable pricing in our U.S. Refreshment Beverages and International portfolios, balanced against previously flagged targeted price investments in U.S. Coffee. Importantly, consolidated volume/mix improved to nearly flat year-over-year, showing a modest 0.3% decline in the quarter.

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Gross margin expanded significantly, up 350 basis points, driven by the favorable combined impact of productivity, pricing, and normalizing inflation. Gross margins also reflected a performance incentive, related to strong commercial execution of our C4 partnership. This benefit contributed slightly over 100 basis points to the gross margin in the quarter and now offers us extra flexibility to drive future reinvestment. SG&A deleveraged 50 basis points in Q1, due in part to a double-digit increase in marketing. All in, total company operating income grew very strongly, up 17.5% year-over-year, with EPS increasing 12%.

Moving to the segments, U.S. Refreshment Beverages net sales grew 4.3%, led by 5.6 percentage points of pricing. Elasticities remain manageable across most categories and volume/mix declined 1.3%, including an initial contribution from our Electrolit partnership.

As expected, our relative market share and net sales performance reflected a later innovation cadence relative to 2023, particularly in CSDs.

These calendar differences will normalize as new products get introduced and our innovation gains traction. In other words, segment net sales drivers should rebalance further towards volume/mix, as market share performance improves and as the magnitude of pricing contribution moderates considerably from here.

Segment operating income grew an impressive 22.4% in the quarter and margins expanded 440 basis points. Tailwinds included pricing, strong productivity, and the C4 performance incentive I mentioned earlier. This combination of factors helped fund higher marketing in the quarter.

All in, we have good line of sight to continued operating income gains in U.S. Refreshment Beverages over the balance of the year, though not at the same magnitude as we experienced over the last couple of quarters.

U.S. Coffee top-line trends significantly recovered, relative to Q4, as expected. While net sales declined 2.1%, volume/mix was close to flat, down a modest 0.3% year-over-year. Pod shipments continued their multi-quarter improvement trajectory and decreased 1.1%. This progress was driven by a steady recovery in volume and market share momentum across our owned and licensed portfolio during the quarter. With multiple elements underpinning this trend, including greater distribution and display and a more appropriately aligned promotional strategy, we expect innovation and activation to begin having an even greater impact in the balance of the year.

Brewer shipments increased 26% in Q1, due to a combination of improving trends in the coffee maker category, continued Keurig market share gains, and timing benefits. On a rolling 12-month basis, which smooths out some of the inherent quarterly brewer volatility, shipments are still down just under 2%, representing an improving trend versus the double-digit decline we experienced in 2023.

Segment net pricing decreased 1.8%, primarily due to previously discussed promotional adjustments across our owned and licensed portfolio. This is in response to competitive activity that began in Q3 last year and continues today. These recalibrations more than offset the continued benefit of pricing we are realizing through partner contracts, while improving segment mix.

U.S. Coffee operating income advanced 1.4% and margins expanded 110 basis points versus the prior year, driven by productivity savings and easing cost pressures, partially offset by higher marketing spend. As expected, the rate of segment margin expansion moderated versus the back half of 2023, as we are managing towards a more balanced top- and bottom-line outcome in this segment in 2024. We are pleased with the progress we made during Q1.

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International segment net sales grew 11.8%. On a constant currency basis, sales increased 7.0%, with very solid volume/mix growth of 4.8% and pricing up 2.2% year-over-year. Our performance included growth across markets and categories, with particular strength in Latin American LRBs.

Segment operating income advanced very strongly, up 25.0% in constant currency terms. Volume/mix growth, pricing, and productivity netted favorably against inflation and higher marketing. We also continue to invest in route to market capabilities, including the on-premise expansion in Canada that Tim mentioned and by strengthening our DSD network in Mexico. Given its outsized growth potential, investing in our international business is a significant priority and should support an increased top- and bottom-line contribution from the segment in 2024 and over time.

Moving to the balance sheet and cash flow. Our Q1 free cash flow represented a use of $73 million dollars. Cash generation is seasonally lower during the first quarter and the year-over- year difference in free cash flow versus Q1 2023 was largely a function of a front-loaded cadence to our capex investments this year. In absolute terms, free cash flow also remained weighed down by roughly $400 million of reductions in supplier financing arrangements. We expect the impact of the carryover effects of these changes to moderate over the coming quarters and for free cash flow to accelerate with full year conversion projected considerably ahead of 2023 levels.

This will support our capital allocation agenda. Our priorities include making organic and inorganic investments to further our growth, continuing to strengthen our balance sheet, and returning cash to shareholders through a steadily growing dividend and via opportunistic share buybacks. We will remain dynamic in managing across these priorities at any point in time, with a balanced approach over the long-term. For example, in Q1, we repurchased 38 million shares for a total of $1.1 billion, taking advantage of an attractive valuation and the liquidity event presented by JAB's secondary offering. Though our management leverage ratio increased modestly as a result, we remain committed to our long-term target of 2 to 2.5x.

Moving now to our 2024 guidance. On a constant currency basis, we continue to expect mid- single-digit net sales and high-single-digit EPS growth in 2024 - both consistent with our long- term financial algorithm. Our plans continue to embed strong top-line momentum in our U.S. Refreshment Beverages and International segments, with a relatively muted growth contribution from U.S. Coffee.

We expect robust productivity savings to help offset a more normal level of inflation. There are, however, pockets of reemerging commodity inflation, for instance in the green coffee price. We will need to monitor and manage these, particularly in the back half. Throughout the balance of the year, we also plan to continue to deploy investment dollars behind brands and capabilities to support our top-line growth.

The incremental flexibility afforded to us by our Q1 outperformance should enable us to balance these considerations. As a result, we continue to anticipate healthy operating profit growth and full year operating margin expansion on a consolidated basis. Consistent with our original guide, we expect some of this operating momentum to be offset by a net headwind from below-the-line items, constraining operating profit flow-through to EPS.

Our '24 outlook embeds the following below-the-line assumptions, which now reflect share repurchase and financing activity from Q1: Interest expense in a $625 to $645 million range for

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the full year; an effective tax rate of approximately 22-23%; and approximately 1.37 billion diluted weighted average shares outstanding.

In closing, we are pleased with the stronger than anticipated start to the year, which bolsters our confidence in our ability to deliver on our full year guidance while fueling a virtuous cycle for the long-term. With that, I will now turn the call back to Tim to close.

Tim Cofer

Thanks, Sudhanshu. Before we move to Q&A, I want to thank our KDP colleagues for embodying our company's Challenger mindset every day. In Q1, we collectively put the business on an accelerating path in a dynamic macro environment. Strong execution was visible across our results and in every country and market in which we compete. We intend to keep building momentum as the year progresses.

Bob, Sudhanshu, the broader executive team, and I feel the team's energy and enthusiasm for KDP's evolved strategy, which was particularly evident at this month's annual summit of the company's top leaders. Together, we're excited to activate this strategy to unlock considerable future value for our shareholders. Thanks for the time, and we're now happy to take your questions.

QUESTION AND ANSWER

Operator

We will now begin the question-and-answer session. To ask a question, you may press "*" then "1" on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. In the interest of time, please limit yourself to one question and one follow up. If at any time your question has been addressed and you would like to withdraw your question, please press "*" then "2." At this time, we will pause momentarily to assemble our roster. The first question today comes from Bryan Spillane with Bank of America. Please go ahead.

Brian Spillane

Hey. Thanks, Operator. Good morning, everyone. Tim, congratulations on the new role. And Bob, hopefully, it sticks this time, right? I don't want you to come back.

Robert Gamgort

I'm confident it will, Brian.

Tim Cofer

Thank you, Brian.

Brian Spillane

So Sudhanshu, I just wanted to pick up on the comment you made about inflation and understand green coffee cost. If you could also give us a perspective on aluminum, just there's -- given the headlines about the sanctions and just the potential increases in aluminum cost, how we should be thinking about that.

And Tim, maybe just on the coffee point, if we're going to see green coffee inflation, but we've also been discounting to get price points in line with where consumers see value, how do we just think about managing margins in coffee if we do see a sustained increase in green coffee costs?

Sudhanshu Priyadarshi

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Good morning, Brian. Let me take the first inflation question, and then Tim will take- take the next question. So, our inflation, we continue to expect some inflation in 2024 overall, but at a more moderate level than in recent year. We talked about green coffee. We're also seeing inflation in aluminum. But as you know, we manage it within our guidance, within our range of outcomes, and we have factored all of these inflation and commodity, and we also hedge some stuff for six to nine months in our guidance. So, our overall guidance for the year, which is mid-single-digit top line and high single-digit EPS factors in all of these scenarios.

Tim Cofer

Yeah, Brian, I'll take the second part of your question. I mean, stepping back on coffee, obviously, as the pioneers of single-serve coffee here in the U.S. and the steward of the category, with almost 80% share of manufactured pods, our primary focus is on growing the entire ecosystem. And that's quite honestly more important than maximizing market share of any given brand.

We aren't particularly interested in competing on price. But at the same time and to your point, we did make some decisions of late to protect, particularly our owned and licensed brand portfolio, when we felt that our competitive positioning was impacted based on some competitive movement that we saw in the back half of last year. So, we did make the decision to adjust the pricing really a couple of points around price gaps.

Having said that, Brian, I would say when you look at our first quarter results, yes, there were some tactical promotional adjustments. But we also grew our owned and licensed distribution points at a double-digit rate. We increased display activity. We also increased brand support, brought some innovation, and I think all of these factors contributed to important strengthening of our business on owned and licensed.

And I expect going forward, other activity around the innovation agenda, you've heard us talk about, both on pods and brewers, accelerated marketing and activation will help us drive continued strength in -- or I would say, improving sequential strength in coffee for the balance of the year.

Operator

The next question is from Lauren Lieberman with Barclays. Please go ahead.

Lauren Lieberman

Great. Thanks. Good morning. I wanted to talk a little bit about marketing in coffee, because one of the things that I've been thinking about recently is that the messaging that you've shared with the Street, the messaging on affordability, some of the advertising you've shared, all feels very spot on. And yet, perhaps over the last 12 months, you haven't had the reach to consumers or the impact to consumers that you might have hoped on some communication messages.

And so as we're thinking about affordability still being very much a concern and I would think a selling point of single-serve Keurig coffee and also the launch of iced, or sorry, the chill machine, I want to hear a little bit more about maybe how you're targeting or approaching marketing differently, key channels to reach the consumer, and what you might be doing to kind of turn up the volume or do things a bit differently than you did in 2023, to get better reach with those messages. Thank you.

Tim Cofer

Absolutely. So we are seeing and we saw this quarter an increase in our total marketing investment on coffee. And I think as we've realigned, back to the question that Brian asked,

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