PepsiCo, Inc.

Operator : Good morning, and welcome to PepsiCo's 2026 third 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. Ravi Pamnani : Good morning, everyone. Thank you, Kevin. 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 updated business plans, guidance, and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, October 8th, 2026, 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 third quarter 2026 earnings release and third quarter 2026 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, Steve Schmitt. We ask that you please limit yourself to one question. With that, I will turn it over to the operator for the first question. Operator : Thank you. In order to ask a question or make a comment, please press star followed by one one on your touch-tone phone at any time. We will pause for a moment while we compile our Q&A roster. Our first question comes from Dara Mohsenian with Morgan Stanley. Your line is open. Dara Mohsenian : Hey, good morning. Ramon Laguarta : Morning, Dara. Dara Mohsenian : Ramon, I thought first maybe we could just get a bit of a state of the union from you on the revenue side as we approach calendar year-end here. Obviously, internationally, another strong set of results in the quarter. You did have some weather and World Cup boost in theory. We are seeing a volatile environment. Just would love your thoughts on the sustainability of the strong growth that you're seeing internationally and the forward growth opportunities. Then just shifting to NA, again from a revenue standpoint, numerous strategy changes this year. Volume, I don't think has responded as much as some has hoped, clearly in North America. Just look back on the efforts in 2026 so far. Any plans to tweak pricing or plans from here? We've heard a lot about snacks pricing recently in the marketplace, so just any strategy tweaks going forward. Steve, if I can just slip in one on the margin side, obviously the earnings revision in Q4 is margin driven with the top-line expectations holding. Just help us understand what changed there. But I think really the context is when you have a big Q4 revision, it may imply further pressure in 2027. Just as we look out to 2027, I know you won't give guidance, but just some of the key buckets, the margins as we look out to 2027, reinvestment to reinvigorate North American volumes, commodity pressure, given that's a big change for Q4, any incremental cost savings thoughts, those would all be helpful just conceptually for 2027. Steve Schmitt : Great. Hey, Dara, this is Steve. Good morning, and thanks for the question. Good morning, everyone. Maybe I'll start with the second question kick it to Ramon for the state of the union, where you began your question. Before I get into the guidance revision, maybe I'll talk a little bit about the quarter, at least from a highlight standpoint. The reality is that we're pleased with many aspects of our Q3 performance. Organic revenue accelerated to 3.1%. Reported revenue was north of 5%. Core operating profit increased 3%, and EPS increased 2%. Importantly, as we look at the health of the business around the world, global beverage volume was up 3%, global food volume was up 1%, and it's actually up 4% if you exclude the grains business in South Africa. Overall, international had really a stellar quarter. Organic revenue increased 8%, operating margin expanded 105 basis points. Now shifting to the North America business. Our foods business in North America, organic sales improved from Q2, and our beverage business in North America decelerated. If I turn to guidance, there are always a number of factors that go into how we think about guidance. The largest changes, and you mentioned, we said in our prepared remarks, was margin performance is below where we expected it to be. Input costs are trending higher, and mix has been a headwind in particular. But despite these pressures, I think it's important to note that we've decided to sustain key investments around the company to make sure that we stimulate growth and build momentum. This includes A&M, which increased in international. It also increased in North America, importantly. It's the margin piece that's driving the guide down in EPS. Sales, as you mentioned, we expect to be robust. Another mention, we're also identifying structural cost reduction areas, and we're going to be using revenue management tools in the coming months to partially mitigate this margin pressure that we have in the fourth quarter. These benefits should start helping as we turn the calendar year. So that's how I think about guidance, the revision. You mentioned 2027, so maybe I'll touch on that too. In 2027, we have clear priorities. We certainly want North America to grow faster and more efficiently. We're going to continue to fuel the international business and maintain momentum there, and we're going to be very disciplined with costs and capital allocation. As you imagine, we've been working through our 2027 plans for some time. We're just not in a position today to provide a complete view of what our expectations might be, and I'd rather not give a partial view now. We'll give more detail on our 2027 expectations in February when we report the fourth quarter. I know that was a lot, but now I'll kick it over to Ramon and give a state of the union. Ramon Laguarta : Okay. You guys got a lot, the framework there. We are pleased with the acceleration of the business. Going into the year, our priority number one was to accelerate top line across the company. If you think about the enterprise, we grew 3.1% in organic net revenue in Q3. That is the fastest rate of growth since Q4 2023. Clearly, an important milestone for us to cross the 3%. We like the way that growth came, which was volume led. If you think, as Steve mentioned, a 3% growth in beverages, global beverage volume, and a 4% in snacks globally, the snacks business, not the foods. We had some large business in South Africa that are very heavy kind of commodity type that impacted the overall global. Good, I would say, very positive threshold. We crossed the threshold at 3%, and obviously, it is on its way to the long-term 4% that we want to get to. International was a big driver of that, and we are very pleased with the momentum that we have been building on international now for many quarters. Dara, you mentioned weather and some tactic, I think it is much more structural. I think we are becoming much more competitive in both foods and beverages in more markets. The scale of the business now is to the point that we put on the remarks that is year-to-date, international is already 45% of our profit, so that we keep building it. It is broad, it is broad-based. It is in Europe, it is in Middle East, it is in Asia, it is in LatAm. Good performance overall. We are not satisfied with the performance in the U.S., and as Steve mentioned, I would provide some nuance, though. The volume bet that we made in snacks North America, especially with the price reset, we are happy with the turnaround in the volume performance. If you think about last year, that business was low single digit negative volume growth. This year, we are low single digit positive volume growth. That is a major turnaround, and it is the price, but it is also some of the innovation, some of the new platforms we are building aligned with the portfolio of the future. Good progress there. We are going to keep investing in those platforms going forward. I think we can accelerate the category, where we gain share in volume now for multiple quarters in foods North America and snacks North America. We are starting to turn that into value share as well. That was the playbook. As you said, less volume growth than what we had initially anticipated. It had to do with the consumer environment. It had to do with some of the commercial execution. That is getting better, and we feel good. We do not feel good about the beverage business. I think the beverage business, as we put in our remarks, we are competing well in some platforms like hydration, like energy. We are not competing well in soft drinks, so we are putting all the urgency of the business and the focus in improving our performance in soft drinks. We are cutting costs in many areas of the business, including corporate unallocated, including overhead costs everywhere, to invest back into the beverage business, also the food business in North America. We're looking at any other opportunities to improve our execution, because I think there's also an element of execution that can improve. That is the state of the union there. For us, priority, as Steve was saying, going into next year, is to maintain the top-line momentum. That's why we continue to invest in the business, double-digit A&M in both businesses in the U.S. this quarter. We continue to invest in A&M going forward. We want to enter 2027 with a lot of momentum and make sure that we manage the business for the long term, which is what we're doing. Operator : Thank you. One moment for our next question. Our next question comes from Bonnie Herzog with Goldman Sachs. Your line is open. Bonnie Herzog : All right. Thank you. Good morning, everyone. Ramon Laguarta : Good morning. Bonnie Herzog : Good morning. I guess I'll follow up on all of Dara's questions. Maybe just a question on PFNA. Curious if you would consider accelerating SKU rationalization on some of the underperforming brands in that business, thinking about maybe in an attempt to redeploy investments behind SKUs that are actually showing signs of improvement or momentum. I guess, if not, could you just maybe walk us through the puts and takes of your current portfolio and why you believe you have the right brands in place? Then, how should we think about you potentially supplementing growth as you potentially pursue M&A in that business to, again, kind of reignite growth? Thank you. Ramon Laguarta : Yeah, I think it's a good point, Bonnie. There are two elements or two big vectors of growth in the U.S. foods business. One is making sure that you provide the right value. So affordability, price points, entry points to the different categories, sub-segments, making sure that we're competitive in that space with a consumer that is clearly challenged. We don't expect the consumer to suddenly become in a much better place in the next 12, 18 months. So value, affordability, price points, giving the people the right format. The second one is, I guess, what you're referring to, which is the portfolio and the portfolio of the future and how we're evolving the portfolio to satisfy the various demand moments of that business. I think we have been investing in multiple platforms that position us very well for the future. The first one is portion control and affordability. We talked about this in the past. We think that 100-calorie packs, 120-calorie packs, that is critical for the future. That business is already $3 billion+. We continue to invest. All the permissible portfolio, we have over $3 billion as well of permissible portfolio, which is going to be the growth space for the future. I think we have great brands in that space. If you think about SunChips, Smartfood, Naked, Simply, PopCorners, and others that I forget at this point. So that is a great portfolio that is growing. We're obviously launching Doritos Protein and some other variants that we see also having very good consumer momentum. So we're doing both things, trying to make sure the core is still very relevant with the right pricing, right advertising, right emotional connection with the consumer. Building these new platforms that is where the double-digit growth are, including, I wouldn't say, indulgence continues to be a great space. So if you think about Miss Vickie's with avocado oil or baked with olive oil. So those are spaces where we're also investing and where we can premiumize the brands. Listen, I think the portfolio is in a very good place from where the consumer is today and where the consumer is going tomorrow. Is there opportunities for M&A in small sub-segments? We've been looking at that for quite some time, both in foods and beverages. We acquired Siete not too long ago. Poppi was another good example in the beverage business. And we keep looking at opportunities to complete the portfolio, smaller tuck-in opportunities that we never say no if it has strategic value, it has financial returns, and it makes sense for the levers of growth that we can provide. But I think we're in a good place from where the portfolio's going. Now, we need to put more investment in scaling up those platforms. That's what we're trying to do, taking cost from other parts of the portfolio of the P&L and investing in those growth platforms for the future. Operator : Thank you. One moment for our next question. Our next question comes from Peter Grom with UBS. Your line is open. Peter Grom : Great. Thank you, operator. I wanted to ask just on North America and maybe just carbonated soft drinks in general. Ramon, it's pretty clear that you are not pleased with the performance of the business. But as you take a step back, can you maybe unpack why performance has fallen short of expectations and as you think about the path forward, what you plan to do differently? Then Steve, just maybe more of a housekeeping question on the organic sales outlook. Approximately 3% growth can mean a lot of different things. So I'm just curious if the right takeaway is that you would expect sequential improvement from the 3% growth or 3.1% growth that we just saw in the third quarter and the fourth quarter. Thanks. Ramon Laguarta : Yeah, I would think about starting from the last point, I would think that way. I think we're expecting sequential improvement as we go into Q4 and especially as we go into next year. So I'll continue to invest. It's a number one priority, invest in growth. Steve mentioned we didn't take any resources away from the business in Q4. On the contrary, we're trying to invest more in growth across the world, international and the U.S., to make sure that we continue the sequential improvement or acceleration of the business on the top line. So that's from how we're thinking about top line. Now, soft drinks U.S., or let's start with LRB U.S. LRB U.S., I think one important priority for us this year was to accelerate the hydration business. That business has accelerated in volume and in net revenue. The overall category is very important for us, the hydration category, which has tailwinds given some of the eating habits and drinking habits of the population. So that was critical. We made that happen. It is working well. We continue to innovate in Gatorade and in Propel and investing in those brands to accelerate. So that part is a good one for us. Energy as well. I think the Alani plus Celsius makes sense by the time we get the two brands into the business and well executed, that will be an important source of growth for us. In soft drinks, as you said, we are dissatisfied. I think there is two things that we are trying to do. One is increase the investment behind the brands. So invest more behind Poppi, Pepsi, Mountain Dew, and some of the other brands we have in soft drinks. The second one is improve the execution. I think there is opportunities for us to become a better, raise the bar on execution in our beverage business, and the team is fully focused. We have great partners in our bottling partners as well, and that is the focus, execution improvements and more investments in the brands to be competitive with our key competitors that have increased their investment in the portfolio, and it is working. Operator : Thank you. One moment for our next question. Our next question comes from Lauren Lieberman with Barclays. Your line is open. Lauren Lieberman : Great. Thanks so much. Hi, everyone. I am going to do two things because everyone is doing two things. The first was just in thinking about the 4Q guide and the margin, I just wanted to ask again, maybe a little bit differently, if you can try to clarify how much of the margin pressure is incremental investment versus incremental and unexpected inflation. Because I think that is really important to just understand both what you are doing versus what you are dealing with from an external environment standpoint. The second thing is just the ROI on the spending you are doing. I know, Ramon, you pointed to volumes in U.S. snacks starting to get better, but is it time to think bigger, if you will. The innovation platform you have had is massive and super impressive, but everything that you have been talking about, if I am honest, sounds a little bit tactical. Are there things you need to reevaluate on how you communicate with consumers, how you are doing your A&M? Bonnie's point on SKU rationalization, but the innovation is there, but is it time to step back and have bigger thoughts about how you do things rather than it being so tactical in nature? Thanks. Steve Schmitt : Hey, Lauren, it is Steve. Let me talk a little bit about margin first. I will not get into granular detail, but I can give you at least a few things on, I guess, costs, A&M, and tariffs. One, I would talk about on cost inflation overall, the teams internally have done a really nice job with our hedging programs. They are typically 6-12 months, and it has shielded us from some costs up until this point where we are starting to see these hedges roll off and essentially our input cost starting to ramp. In spite of that, we are going to be investing in growth across the company. I think it is important to mention not just internationally, but we want to make sure we build momentum in the North America business. The piece on margin that is important to model is we did have a benefit in our beverage North America business in the third quarter related to tariffs. We talked a little bit about in our remarks about how much that was, and once that goes away, that puts some more underlying pressure on the North America beverages business that we did not have in the third quarter. And sorry, in investments in A&M, that we will continue to do that. Obviously, we want to have momentum going into next year. Ramon Laguarta : Okay. On the A&M investment, I think two points there. One, quantity and then quality. I think quantity, we are looking at every cost in the company and making sure that any cost that is not linked to growth is not there, including overheads, including corporate unallocated, including any line that you can think of. Because we think quantity matters, and we need to invest more in growth in the U.S. business, both beverages and foods, and they both deserve. Now, quality is, as you saw, we are making some important pivots in how we are thinking about investing that A&M with much higher return. We announced a few weeks ago a partnership with Publicis. That is an important capability for us. As we go into this partnership, we will be able to invest with much more data, much more granularity, understand consumers, and be able to talk to consumers in a different way, where I think we are going to get better return on the investment, or not one thing, I am sure, given what I know about the capabilities we both have. I think both quantity and quality, you will see more investment in A&M, and you see better investment in telling every consumer about our products and telling them in a way that they will be much more enlightened with it. I think that is how we are thinking about it. Obviously, we continue the journey of increasing the competitiveness in the U.S. and accelerating the categories, which is the role that we need to play for the long term. Operator : Thank you. One moment for our next question. Our next question comes from Kaumil Gajrawala with Jefferies. Your line is open. Kaumil Gajrawala : Hey, everybody. Good morning. I know there has been many questions around this topic, but just to make sure that we understand specifically, particularly because of various media reports of higher pricing or lower pricing or whatever it happens to be, what exactly is the plan? Which direction are you, what is the correct direction of travel? That is on North American foods. Then on beverages, the word urgency you have used many times. What does that mean? Because urgency sounds tactical, as Lauren had mentioned, but brand building and all those other things usually take a lot of time and could use a pivot. Just trying to understand what do you really mean by urgency in terms of what you want to do on the beverage side? Both of these questions, of course, are North America specific. Thanks. Ramon Laguarta : Yeah, I would say urgency means we are going to look at every cost with aggressive lenses and with the lenses that everything that is not related to growth will not be part of the company. So that to me is an important mindset. Then putting the money against the brands that will drive us growth. Then on the executional side, raising the bar on what is expected from everyone in the company, in every customer negotiation, in executing in every point of sale, in the levels of granularity and executional excellence that we are going to look in our people. So those is how we are thinking about it. Now, we are also looking at are all the decisions that we have made in terms of how we execute the business, the right decisions. Should we look at partnerships in other ways? We're looking at every single element of the strategy in terms of executing in the U.S., and we're not taking anything for granted in that space. What was the other— Pricing in North America. Pricing North America. Pricing North America. As I was saying earlier in Dara's question, we're pleased with how the pricing investment has worked for us in the food business. We were negative low single digit in volume in snacks in the U.S. Now we're positive volume and units and gaining shares. That gives us, I think, flexibility in what do we do, to absorb this new wave of inflation that is coming to every country, not only the U.S., given energy prices and given agricultural prices. We're going to see a mix of net revenue management tactics that will impact some pricing, but also mix and all the decisions that we can make around that. We're going to see a lot of productivity, the one we've been doing for many years, but additional areas of productivity to minimize the decisions we have to make in increasing the cost to our consumers. We feel good about the way we're thinking about this. We're putting some guardrails to our people, making sure that next year's pricing is going to be below $25, so we continue to be very affordable in most of the take-home parts of the business. We don't set pricing. Obviously, our customers do. But we have the right conversations, and we have the right partnership in how we drive volume in the category. We're trying to be very cautious, but there's going to be a set of tactics between net revenue management and productivity to mitigate the inflation that is coming through our various lines of the P&L, as Steve was saying earlier. You want to say anything else, Steve? Steve Schmitt : No, you covered it. Ramon Laguarta : Okay. Operator : Thank you. One moment for our next question. Our next question comes from Kevin Grundy with BNP Paribas. Your line is open. Kevin Grundy : Great. Thanks. Good morning, everyone. Ramon, question on potential consideration for bigger strategic changes that could unlock value at PepsiCo. Spent a lot of time on North America. I know you're not pleased with where that is at the moment. I think it's clear that the results there have singularly driven the stock price lower because international continues to perform really well. Can you comment on the Board's consideration for bigger strategic changes? I think there's an argument to be made that there's real latent value in your stock price. Whether this is splitting North American International, which have very different financial profiles now, splitting snacks and beverages, which you're well aware has been discussed for decades among the investment community, brand divestitures, bottler refranchising. I just ask in the context of perhaps there's a better structure for shareholders that maximizes value. So your updated thoughts there would be appreciated. Thank you very much. Ramon Laguarta : Yeah. Thanks. Listen, obviously, we're not satisfied with the performance, and that means that we have to look at options that improve our performance long term, right? It's not only about the short term, it's the long term. We have been talking about how, especially to your point on go to market and business model, listen, we're open to revisiting every option. We're working with the team on accelerating some of the tactics on the integration part where we can eliminate cost. But also we're looking at, are there opportunities to expand or accelerate some of the refranchising in some parts of the country where we have good partners and where it makes sense that partnership will drive better execution and potentially better margin for the company. So we're opening all the avenues. Clearly, as you were saying, the performance of the business requires that we are open and we're realistic with the realities of the marketplace, the inflation, the consumer realities, and where does it make more sense to invest the resources of the company to drive growth long term. So yes, we're looking at everything and these are important decisions that we'll be making with a sense of urgency and with the strategic midterm, long-term vision that we always run the company with. Operator : Thank you. One moment for our next question. Our next question comes from Robert Ottenstein with Evercore ISI. Your line is open. Robert Ottenstein : Great. Thank you very much. Two quick ones. One, I was wondering if you could give us an update on your efforts to integrate the food and beverage business in the U.S., if you were piloting something in Texas, and I think it's been going on now about eight or nine months, so I'd love to get an update on that. Then second, you're doing more and more with Carlsberg internationally, and I guess it's working well, but I'd love to hear what you've learned from that experience working with Carlsberg, and particularly a beer company, and how you've been able to maintain strong execution. Thank you. Ramon Laguarta : Good. So listen, we've been with beer companies around the world for quite some time. ABI, we have partnership in Brazil and Argentina and some other parts of the world. So, and with Carlsberg, we've had relationship for many years in Norway and Sweden. So this is an expansion of a strategy which is in countries where we have a business that competes well but is not the leading business. Merging with the resources with a beer company makes a lot of sense, it gives us presence in the on-premise channel, and it gives us very good execution scale in the in-home channel. So this is working. Carlsberg has been an incredible partner. The latest example of that partnership is in the U.K., the Britvic acquisition they made, and that has been a very successful investment for Carlsberg and also for PepsiCo as we keep growing share in the U.K. Now we've expanded to other geographies. The strategic, I would say, we're both together for the long term, and we believe this is a win-win, and the resources are being invested on both sides. It's great. So we'll continue with Carlsberg, but it's the same philosophy we have with many of our bottlers globally. Now on— Robert Ottenstein : On One North America. Ramon Laguarta : On One North America, we keep working, not so much the strategy anymore, but the execution of this tactic. There is a lot of positive news. We will update all the investors in a future meeting. Now, the integration is working well on the physical side with warehouses and the transportation. Now we are into the details of delivery into the small shops, the bigger shops. Clearly there is a lot of value we are seeing both for the customer and for us. This will apply to some parts of the country, as we said. I think long term, this will apply to some parts of the country. Now, there are other parts of the country where this will not apply, and that is the comment I made earlier about, can we accelerate refranchising in some other parts of the country and take value earlier? Again, this is the hybrid approach, the nuanced approach by geographies. The team continues to, I think, learn and execute the details that matter in this kind of transformation. Operator : Thank you. One moment for our next question. Our next question comes from Andrea Teixeira with JPMorgan. Your line is open. Andrea Teixeira : Hey, good morning, everyone. Thank you for the question. I was hoping if, and I do appreciate, I would say, more of an open conversation about revisiting the refranchising in the U.S. and then the One Pepsi commentary you just gave to Robert. When you said urgency, how is the shape and form and, to your point about hybrid, the complexity of your system and the many partnerships you have, how we should be thinking, how we should be measuring success, and then the timing of it. It seems like it is going to be like a multi-year, as it was, frankly, with all the companies in the industry. How we should be thinking in terms of potential savings, or more than savings, I would say synergies in terms of execution, the eye on the ball, the last mile, your ability to obviously check the coolers and any AI that you've been using for productivity that could illustrate an acceleration of that execution and potentially convert into savings given the obviously the DSD system now with higher cost of service can improve that and perhaps we still can complement on that when it comes to large customers and accounts, how that system, the hybrid system, will work better for you than, I would say, a full refranchising. I know it's a lot in there, but just to think about strategically now and how fast we could see the results coming through. Thank you. Steve Schmitt : Hey, Andrea, it's Steve. Thanks for the question. Maybe I'll just talk a little bit about urgency. The sense of urgency around the company, as you would expect, is very high in all that we're doing, and the business reviews and how we're operating and our attention to detail on costs and looking at other parts of the company, whether even that's corporate unallocated, to make sure every dollar we're spending on shareholders' behalf is providing a benefit to the business and a return that we'd be proud of. There's a lot in the question that you asked, I don't think I'll go through all of the different details, but just you should know and from a sense of urgency standpoint, just in the short time that I've been here, you can see it's shifting gears, in all that we're doing. Ramon Laguarta : Yeah. If you think about growth, margin, and long-term marketplace performance, we're looking at execution as an important lever. Everything you said around where can we execute better as a combined business, from the growth cost or where we can leverage a partner, I think we're obviously looking at all of it at this point. The solution will be a mix of solutions for different parts of the country. The key point being growth, marketplace execution, competitive performance, and margin. We'll get to that when the moment comes. Operator : Thank you. One moment for our next question. Our next question comes from Michael Lavery with Piper Sandler. Your line is open. Michael Lavery : Thank you. Good morning. Just wanted to come back to pricing, but on the North America beverages side. I appreciate, of course, aluminum costs are up, diesel, the tariff refund goes away, and there certainly is a case for pricing there that it sounds like you're making. But how do you balance that with the need to compete more effectively that you've also called out? Just help us understand what your pricing approach is and how we should think about volume growth expectations. Ramon Laguarta : Yeah, I think the same answer I gave to the food business. I think there will be a mix of tactics on net revenue, trying to provide as much value as possible to consumers in the right occasions and the right moments with the right brands. Then continue to go very aggressively at productivity. We've been on productivity for multi-year, and we mentioned automation, digitalization, standardization of the company network, rationalization that you've seen in some of the beverage business with some asset divesting. But we're even accelerating that even with more structural productivity and making sure that all the money that is not linked to growth disappears from the company, all the duplications. I referred earlier in the call to overheads, to corporate unallocated, things that don't make sense. Make sure that with a sense of urgency, we pivot those resources towards growth and making sure that we're affordable, that we capture the opportunities for net revenue management and growth in the business. Operator : Thank you. One moment for our next question. Our last question comes from Peter Galbo with Bank of America. Your line is open. Peter Galbo : Hey, guys, good morning. Just two really quick cleanup questions from me. Steve, I think just in the context of the Q4 kind of guidance reduction, maybe you can just give us a sense order of magnitude, how much kind of the inflation expectation moved up that drove that? In that context, I know you don't want to get into 2027, and we're all trying to kind of develop a framework to think about it, but just as some of these hedges kind of roll and obviously you're working through the plan, just if we're constructing a narrative for next year, is it very much the case of, hey, maybe expect a bit more of that pressure, at least in the first half of next year? Just want to make sure that we're kind of trying to level set expectations as best we can at this point. Thanks very much. Steve Schmitt : You're welcome. Look, the piece that I would assume is commodities are ramping up, right? We'll see some of that in Q4 as the hedges roll off. Our hedging program again, is 6-12 months. We'll give you a more complete view on how that all comes together in February, but as a general trend, commodities continue to ramp up. Ramon Laguarta : Okay. Listen, thank you for the conversation today, and thank you for the investment in PepsiCo and the confidence you give us by investing in our company. Thank you, and see you all around. Thank you. Operator : Thank you, ladies and gentlemen. This concludes today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day. Ramon Laguarta : Thank you, gentlemen.