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02 Thank you for standing by ladies and gentlemen, and welcome to Coca-Cola HBC's Conference Call for the 2021 Full-Year results. We have with us Mr. Zoran Bogdanovic, Chief Executive Officer; Mr. Ben Almanzar, Chief Financial Officer; and Ms. Joanna Kennedy, Investor Relations Director. At this time all participants are in listen only mode. There will be a presentation followed by question-and-answer session. [Operator Instructions]. I must advise you that this conference is being recorded today, Thursday, February 22, 2022. 00

46 I now pass the floor over to one of your speakers, Ms. Joanna Kennedy. Please go ahead. Thank you.

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56 Good morning. Thank you for joining the call today to discuss Coca-Cola HBC's full year 2021 results. Zoran and Ben will present the results and following that, we will open the floor to questions. We have 1 hour and 15 minutes available for the call today, which should give roughly 45 minutes for the question. We would therefore ask you to keep 1 question and 1 follow-up before joining the queue again. 01

20 Before we get started, I me remind everyone that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements on the screen. This information can also be viewed in our press release issued today. 01

34 Now let me turn the call over to Zoran.

01

37 Thank you, Joanna. Good morning, everyone, and thank you for joining the call. 2021 has been a great year for Coca-Cola HBC. I would like to take the opportunity to thank our passionate and engaged people, who continue to show great creativity and adaptability in making Coca-Cola HBC a stronger and better business every year. And also a very big thanks to all our customers, the Coca-Cola company team, Monster Energy team and all our other partners for their trust and partnership. 02

15 Six things really stand out to me from our results today. One, the strength of our financial performance. All key lines are now above pre-pandemic levels with strong growth in 2021. Two, this growth is being driven by strategic choices in the portfolio, low and no sugar variants, adult sparkling and energy in particular. Three, we have been able to increase prices, while continuing to gain significant share. We are also adding value to our customers. In 2021, we were the largest contributor of incremental value to our customers across the whole FMCG space. 03

05 Four, we are investing in future growth opportunities with marketing spend and CapEx increasing in the year. Five, given our confidence in our future opportunities we are increasing our dividend payout ratio target. And finally, the strongest relationship we've ever had with the Coca-Cola company team reflected in the fast decisions and actions we take together, as well as creation of our future planes. 03

38 2021 has not been without challenges, we are therefore even prouder of our strong results. Reopening has been asynchronous throughout our territories. And we had to successfully navigate significant global supply chain disruptions and input cost inflation. Ben will take you through the financial performance in more detail later. Here, I want to call out a few key achievements. 04

09 Top line growth has been very strong with like-for-like revenues up 20.6% in the year and that's 10% above 2019 levels. As you might have read in our release this morning, we sold an idle property in Cyprus in December. EBIT growth was 20.2% excluding this. Importantly, we delivered very strong operational leverage, while taking marketing spend up 63%. And finally, free cash flow was the highest in our history, allowing another year of growth in the dividend. Through all these we continue to put our investments and executional efforts behind the pillars of our 2025 growth story. 05

01 We are making conscious choices across our powerful 24/7 brand portfolio. We are winning in the market through creative and disciplined execution, which resulted in another year of share gains. We continue to invest broadly behind our growth opportunities, while being highly disciplined on costs. And we continue to nurture the talent and potential of our people. We are a high performing organization and also one that cares. I’m therefore pleased to see us ranking in Forbes World Best Employers list in 2021. We are creating a diverse and inclusive workplace, which has been recognized by Refinitiv’s DNI index that ranks us in the top 8 of the 11,000 companies they surveyed globally. Finally, it was another year of action and recognition for our sustainability efforts that I will refer to later in my remarks. 06

12 Turning now to the opportunities we see in our new Egyptian market. With our roots in Africa, we are extremely pleased to be welcoming the team from another African market to the group 70 years later. Egypt offers tremendous potential, not just due to its size and attractive demographics, but also because we see the potential for both increased per capita consumption and market share expansion. The integration work is on track. We have already started building commercial capabilities in the market, particularly around revenue growth management, route to market and digital. And we have strong portfolio expansion plans. 06

57 We are also excited to learn from the best practices that the Egyptian team have in place, for example, their excellent work on [Swaps] (ph) portfolio development. We are really excited about the impact and growth we can achieve in the market, while moving Egypt’s margins towards group average over time. 07

21 Let's move on to our top line performance in 2021. The easing of restrictions across our markets fueled a strong recovery in on the go occasions in the year. As we have seen, the recovery was not linear. However, the clear overall improvement can be seen in the volume performance of the out of home channel. Even as the out of home channel reopened, we have continued to deliver strong performance in the at-home channel. We see the opportunities around new and larger at-home occasions and are gaining share. As I mentioned before on these calls, the data suggests that some of the newer at-home trends are here to stay. We are well positioned to continue to win in these occasions. 08

13 If we look at performance by segment, there are some clear contrast. Throughout the pandemic and in this recovery year, we have benefited from our exposure to emerging markets. These markets were more resilient in 2020 and have seen the fastest growth in 2021. We’ve continued to drive strong performance in Nigeria, Russia and Ukraine with all 3 now having volumes more than 20% about 2019. This has been consistently driven across all markets with strong performance in sparkling and energy. 08

51 Importantly, despite the world's spot light being on Russia and Ukraine this past few weeks, those markets have maintained strong momentum in 2022, as health Nigeria. The established segment is more exposed to our out of home channel and volumes there have not yet reached 2019 levels. That said, recovery in these markets has been strong. For example, in Italy, we have seen the benefit of our broadening portfolio with strong share gains, and we are seeing very good recovery in the out of home channel, supported by focused plans and investments. As a result, our premium offerings have performed very well with glass volumes up 58% percent and cans up 30%. 09

44 As you will know, the developing segment was impacted by the Polish sugar tax. Here we are pleased to see strong performance for zero variants and energy. Coke Zero volumes were up 20% showing that our mitigation strategies are working and driving share gains. Going forward, we expect all segments to grow volumes with the established and developing segments continuing to close the gap versus 2019. 10

17 Now let me focus on pricing and mix. Along with volume, we have been very deliberate in driving improvements in price mix throughout 2021. The out-of-home channel reopening is a key contributor to the better package mix. However, this is by no means the whole picture. For example, package mix in 2021 was higher than before the pandemic. We have increased prices in over 95% of our markets in waves throughout 2021 without seeing any volume impact. And we had an additional price increase in Q4 in direct response to higher commodity costs. At the same time, we have been continuously optimizing and improving the return on our promo investments. 11

07 The work we've been doing together with the Coca-Cola company team on our revenue growth management tools makes us confident that pricing will be a critical lever once again in 2022. We sell a product with a very different elasticity by occasion, brands and package. We use our revenue growth management tools along with data and insights to translate these understanding into faster and better actions. These actions are segmented by channel and customer and our focus on driving value growth in the category. 11

47 Let me now discuss the opportunities for further growth in our portfolio. Sparkling remains the most important contributor to our business. Historical performance has been strong with average volume growth of the 5 past years just under 5%. Trademark Coke, Fanta and Sprite had very good growth in 2021. One key driver of growth in the sparkling category is innovation. Together with the Coca-Cola company we have a disciplined innovation framework going after fewer bolder initiatives. We can see that our strong pipeline of well selected launches continues to stimulate growth. 12

28 Examples include the reinvigorated Coke Zero now in place across all our markets, as well as zero sugar variants across sparkling flavors. Sprite performance has been particularly encouraging, benefiting from the successful new marketing campaign [Let's Be Clear] (ph). I think it's important to understand that the sparkling portfolio we have today is different and stronger than what it was in the past. Today, we have a much higher proportion of low and no sugar variants in the mix. As well as an important and growing contribution from adults brands. 13

08 The growth from these two sparkling subcategories continues to be much faster than the rest of the portfolio. Low and no sugar volume growth has averaged 23% over the last 5 years. And that includes 2020, which was obviously heavily impacted by the COVID-19 pandemic. Adult sparkling volume growth has averaged 10% over the last 4 years. And good to keep in mind that adult sparkling has a higher revenue per case than the average for sparkling. Both are generating positive momentum in the sparkling category that we believe will continue for many years given consumer trends. 13

54 Now moving on to another rapidly growing part of the business. Energy has been a significant contributor to the group over the last few years and 2021 was no exception. Volume growth in the category has averaged 29% in the past last 5 years. This has been driven by successful innovation, expansion and strong execution of the brand portfolio. The result is the increased importance of energy in our revenue. And of course, this is high quality growth given that energy is accretive to our mix, both at revenue per case and at EBIT margin level. We expect that the categories contribution will continue to expand, driven by the pace of innovation that we are seeing from our partner Monster Energy. 14

43 Examples are the recent launch of the affordable brand Predator, which has unlocked massive growth in Nigeria. As well as the launch of Rain in the premium part of the energy category in Ireland, Poland and few other markets. We are investing behind the coffee category, which we expect to be a source of growth for the business for many years to come. 15

11 We have two brands to access the EUR9 billion distributor market in our territories. Costa Coffee in the mass premium space, which has a full at-home and out-of-home offering, while Caffe Vergnano is a premium brand primarily focused on the out-of-home channel. We rolled out Costa Coffee to 3 more markets in 2021, bringing our total to 17. And we have launched Caffe Vergnano in 3 markets and will continue rolling out both brands throughout the rest of the year. We are seeing strong results in terms of customer take up and repurchase, market share and also revenue growth. 15

55 We have continued to invest behind our digital commerce strategy in 2021, focused on both route to customer and route to consumer. Firstly, within our route to customer, we have been developing and investing in a suite of digital B2B platforms and solutions. Customer portal, our main B2b platforms, allows our customers to order direct from us 24 hours a day 7 days a week. This platform now accounts for 8% of our transactions, up from 2% just a year ago. It is convenient for customers. And critically, it allows our business developers to spend more time on category strategy execution and customer relationships rather than taking orders. In addition, by lowering our to serve, the portal can allow us to lower the breakeven point for customer acquisition. 16

51 In addition, We've been working with the Coca-Cola company on Wabi2B as the one stop show primarily for traditional trade, allowing customers to buy products from us and other FMCG companies. Wabi2B is now live in Russia and Nigeria with good early take up. At the same time, we are investing in our digital route to consumer. This includes partnerships with our existing customers who sell online, as well as newer digital first customers such as pure play e-retailers and also food service aggregates. Growth rates are strong, up 87% year on year, reaching 3% of 2021 revenues. 17

38 Moving to another crucial area of investment. Taking action climate is the priority for Coca-Cola HBC. We have a strong track record of making and achieving clear science based targets on emissions reductions. In the last decade, we have reduced our absolute value chain emissions by 31% or by 50% across our own business. With our net zero commitment, we have set targets to reduce emissions by 25% percent to 2030 and by further 50% in the following decade. Management and the Board are fully aligned on the importance of this initiative. We will remain accountable on our progress with emissions reductions being included in our long term incentive plan. 18

30 In 2021, we have continued to make good progress on our Mission 2025 sustainability commitments. And I'm proud that we continue to be recognized for our efforts. We have once again been ranked as an A list business by CDP on both climate and water. And I'm particularly pleased that they have also ranked us as the supplier engagement leader in the top 8% of all assessed companies. This award recognizes the work we've been doing to engage with our suppliers to tackle climate change. Partnership with our suppliers will be critical in reducing our emissions across the value chain. 19

12 In addition, for the 11th year running, the Dow Jones Sustainability Index has ranked us in the top 3 of all beverage companies globally and number 1in Europe. Maintaining this consistently leadership requires commitment and investment. We know there is still much more to do, but we are proud of our progress and determined to push for more. 19

34 I'll now pass over to Ben to take you through the financials in more detail.

19

40 Thank you, Zoran, and good morning, everyone. Before diving into our financials in more detail, let us spend a moment on the overall 2021 business performance. We have said many times that the base of comparison for 2021 is not 2020. We expected to show big improvements versus last year, given the impact of the COVID-19 pandemic. 20

04 I am very glad to report that our business has delivered results above 2019 on every key performance indicator. With that, let's dig into the drivers of our 2021 performance. Like for like volume accelerated in the second half and was up 14% in the year, closing 9% above 2019levels. Price mix also improved, up 5.8% or 3.9% excluding the pricing taken to offset the Polish sugar tax. 20

40 If you look at price mix performance in 2021 on a 2 year stack, we can see improved momentum versus 2019 through the year. This was achieved through careful bur determined actions. We heard Zoran talk about pricing earlier. Pricing was the most important factor accounting for half of the revenue per case increase in 2021. Category mix improved with a faster growth from sparkling and energy, contributing a quarter of the NSR per case expansion. 21

17 The last upside came from package mix, where our actions to grow single serve in the at home channel and capitalize on the out-of-home reopening, so single serve mix finished the year 4 percentage points above 2020 levels. As anticipated, country mix was negative, given the fast pace of growth from the emerging segment. 21

46 EBIT grew by 23.6% with comparable margins expanding 60 basis points year on year. A transaction to dispose of an idle property in Cyprus closed in December and contributed 30 basis points to this result. From an accounting perspective, this sale constitutes part of our comparable EBIT and sufficient management of our fixed asset base is part of the normal course of business. However, we're calling it out for 2 reasons. Firstly, because the precise timing of the deal was not known when we set the guidance. And secondly, because another sale of this magnitude is unlikely to repeat. As such, we believe that the fair assessment of business performance would consider EBIT margin expansion of 30 basis points in 2021, consistent with our original guidance. 22

43 Let's unpack what contributed to the robust results. We already touched on pricing and mix, therefore I won't repeat. Down the P&L, we benefited from solid hedge positions across our key commodities, as well as long term contracts with our suppliers, which help mitigate inflation in half one. Input cost, manufacturing and logistics pressure was far more pronounced during the second half. We finished the year with mid-single digit increase in cost per case. 23

19 We also continue to deliver efficiencies through the benefits of positive production and overheads leverage, as well as going through activity initiatives in our supply chain. As anticipated, we have seen the consistent awkward pressure on commodities extending into 2022. We are prepared to steer the business in a significant inflationary environment. That is why we're counting on continued pricing actions, making the mix work harder and disciplined cost management to deliver on our goals for this year. 23

57 Moving to OpEx. We make the most out of the operational leverage from the strong revenue growth in the business. We're working differently and require less discretionary spend, travels, meetings, consultancy fees and training were all kept near 2020 levels. This in turn has allowed us to restore marketing spend, while still driving OpEx as a percentage of sales down by 2.2 percentage points to 25.1%. 24

33 To complete the picture, marketing support for our brands was up 63% percent, reaching 2% of revenues for the year and only 20 basis points shy of 2019 levels and above than in Q4. Together, these factors contributed to the strong EBIT growth and margin expansion we are reporting today. 24

56 Looking forward, we expect continued strong operational leverage on fixed costs, and absolute focus on cost discipline. However, it is fair to say that to repeat the same scale of the reduction in OpEx as a percentage of sales in 2022 would be challenging. Overall, we expect to be able to continue delivering EBIT growth in 2022 and I'll take you through the guidance in more detail in a moment. 25

24 Turning now to the drivers of performance on a segmental basis. Established market segment FX-neutral revenue growth grew by 13.9%, propelled by both volume and price mix in 2021. EBIT grew by 44%, while margins expanded 250 basis points, of which, 90 basis points was due to the property sale in Cyprus. The rest is mainly due to operational leverage and revenue growth. 25

57 The developing segments currency neutral revenue increased by 18% with price mix expanding 17%. FX-neutral revenues are now 4.7% above 2019levels. Performance was impacted by the Polish sugar tax. Without it, the segment's price mix growth was 5.8% and volume growth was 4.4%. We expect Poland volumes to return to growth in 2022. EBIT grew by 4.3% with EBIT margin way down by the sugar tax. 26

38 We continue to see sustained strong momentum in the emerging segment with like for like revenue up 27.1% twenty. FX-neutral revenues are now 24% above 2019 levels, propelled by Russia, Nigeria and Ukraine, as well as recovery in the rest of the segment. EBIT grew by 17.3% and emerging remains our highest margin segment. 27

08 As we travel down the P&L, we harvest the benefit of broadly reduced finance charges, combined with a much improved tax rate, which boosted EPS up 33.7%. Cash conversion decisively improved in 2021. Free cash flow expanded 21% year on year, building on the strong performance in 2020. We achieved the highest free cash flow in history, while continuing to opt investments in the business. 27

43 CapEx reached 7.5% of revenues. We focus on four key areas. Building additional production capacity in priority markets and categories, increasing our coolers, which are a key driver and enabler for single serve mix, accelerating our investments in our digital agenda, and continued support of our sustainability commitments. 28

12 I am proud of the pace of recovery in ROIC seen in 2021, which builds on the positive trajectory of prior years. We are reaping the benefits of having rationalized our supply network, optimize our logistics infrastructure and improve our cost to serve. As revenue grows and margins expand short those asset efficiency. And of course, we invest behind projects, which we expect can improve ROIC over time. 28

46 Again finished at 1.1 times net debt to EBITDA. However, in January, we closed the acquisition of Coco-Coco bottling company of Egypt, and this will take our leverage ratio to 1.6 times. We continue to maintain a strong balance sheet. This provides optionality for our capital allocation priorities. Including organic investment, M&A and our progressive dividend. Of course, when the available investments do not meet our requirements, we will return capital to shareholders. 29

24 Let me take this opportunity to inform you of a change we are planning on making to our disclosure. Which we hope will improve the clarity and simplicity of our reporting. We'll will be introducing organic growth as our key reporting measure for the market in 2022. We believe that this will enable better understanding of underlying business performance. As you know, we have endeavored to provide market participants with the required numbers to allow this look through. However, we're conscious that this approach creates complexity, and we believe that organic measures will be more straightforward. 30

04 We'll be providing you with more detail ahead of Q1 results, and of course, myself and the IR team will be as helpful as we can with any questions you have. It is important to note that we do not anticipate this change having any impact on guidance beyond semantics. FX-neutral guidance will shift to organic revenue and comparable EBIT growth will shift to organic EBIT growth, but with the same expected ranges. 30

35 Looking out to 2022 and beyond, it's clear that the business has momentum. We can also see that 2022 has got off with strong start. We will stay the course on our strategic choices, pursuing the most attractive growth opportunities. We are confident behind the plans and the business adoptability and the resiliency to thrive as circumstance of change. We have got a good understanding of the significant inflationary pressures we face in 2022. We remain focused on mitigating actions, including pricing, beneficial category mix, as well as productivity and cost savings initiatives. 31

23 Given all of these, we expect 2022 to be a year where we grow FX-neutral revenue, excluding Egypt, above the 5% to 6% range targeted as an average to 2020 five. We currently anticipate being able to continue to invest in top line growth, while growing comparable EBIT by low to mid-single digits. This encompasses a range of possible scenarios for the business, including cost per case that we expect to be at the upper end of high single digits could go into low digits in inflation as commodities intensifies. 32

05 Second is FX, where our current expectation based on spot and our hedge rates will imply FX-impact below 2021. A worsening of geopolitical tensions could impact that scenario. We will continue to monitor these factors as the year progresses given our strong cash flow generation, solid balance sheet and positive long term outlook for the business, we are announcing an increase of our dividend payout range to 40% to 50%. 32

37 With that, let me pass the floor to Zoran.

32

41 Thanks, Ben. We are really pleased with the strong results we have reported today. But even more than that are excited about our opportunities. The category we operate in is large and growing. And our 24/7 portfolio allows us to address every beverage consumption occasion. 33

02 Our people, culture and capabilities remain a distinct competitive advantage helping us to win in the market through close partnerships with our customers. We operate in highly attractive geographies with growth opportunities across emerging, developing and established markets. We have a strong track record of managing costs. We are successfully navigating short term challenges and investing in long term opportunities. And we continue to make good progress on ESG and are determined to remain leaders here. 33

40 Looking to the future, we remain confident in our strategy and in our ability to continue to deliver long term growth and shareholder value. Thank you for your attention. And I will now hand over to the operator, and Ben and I will take your questions.

34

15 Thank you. [Operator Instructions] We have our first question coming from the line of Sanjeet Aujla from Credit Suisse. Please ask your question.

34

22 Goof morning, Zoran and Ben. A couple from me, please. Firstly, Zoran are you able to reflect on potential impact from any sanctions that might be in Russia on your business, particularly as it comes to production and supply? What sort of contingencies do you have in place there? And maybe Ben, I think you commented a little bit on transactional FX outlook, but how hedged are there for the year ahead? 34

51 And my second question is just on the commodity cost component. If we were to get a further step up in commodity through the course of the year how would you think about incremental pricing to help mitigate that? Thank you.

35

14 Thank you, Sanjeet. Let me just say few things that I think are worth noting with this geopolitical situation that we are experiencing last couple of weeks. And especially last couple of days. Firstly, I think it's good to note and remind that both Russia and Ukraine have been a strong contributors to growth last year. And I'm very pleased that to date they've been also showing very good performance this year. So, first of all, there is no impact so far from this situation. Impact is reflected more in the sense of the ruble, as well as the energy cost and that has been part of informing our guidance that we have shared this morning. 36

08 And also how that will evolve if situation deteriorate will put us more on the lower end of the guidance or if we see that situation might ease as, even today, we see that there could be a variety of scenarios ahead of us. 36

30 Additionally, having past experience from a number of crisis situations and not so long growth 7, 8 years ago kind of a similar situation that was there with Russia and Crimea. I just want to say that leveraging that experience and knowledge, we have assessed various possible scenarios for which we have precise contingency plans and we are ready to activate any of those plans depending how the situation will evolve. Those are holistic plans, which are dealing with all the elements and angles of supply point production, operating, financial aspect as well as people safety and protection aspect. So, I just want to reassure that we are fully on top of it. 37

31 One more thing if I may, is also to say that, I just want to highlight versus the last time, there was similar situation. I just want to reinforce that Hellenic is in a much stronger position with the browser portfolio, strong capabilities, strong team and very well performing all corners of Hellenic. So just want to close on this topic, which I thought might come as a question, of course, just to say that we are as ready as one can be to deal with this situation, however, it turns. 38

10 Before Ben answers the part, that you said, Sanjeet. I'll just say on the incremental pricing. Yes, depending how the situation evolves on commodity pricing, etcetera, possible additional pricing beyond our plan, yes, it is an option. Our teams are continuously monitoring and observing situation, competitive dynamics, everything and this is where our strong RGM capabilities and toolkit come into play. And yes, additional significant pricing through targeted approach is an option. Ben?

38

55 Thank you. Let me be [indiscernible] and build on Zoran’s point to give some more color around the guidance and the implication of the scenarios that we're looking at to give you a sense of the kind of assumptions that would steer us towards the upper end, for example. We will see an easing of input cost inflation and moderation in energy prices. This will ideally happen in the first half, but if not definitely throughout the second. We’ll see the escalation of geopolitical tensions in that Russian-Ukraine border, allowing for the role out to strengthen on the back of the strong line fundamentals that we see in the Russian economy. Conversely, the lower end of that range would imply a further deterioration in the commodity environment. That cost per case that we're currently expecting to increase at the top end of high single digit will creep into double territory. And we are currently anticipating FX headwinds to be less than in 2021. 39

56 We are well hedged on the [indiscernible] for the first half of the year, which gives us some confidence, but if we see worsening in the region turning into conflict, this could add further risk to the FX guidance. For either of those scenarios, we would expect to see the EBIT growth at the lower end of range.

40

18 Very clear. Thank you, both.

40

22 We have the next question coming from the line of Simon Hales from Citi. Please ask your question.

40

28 Thank you. Good morning, Zoran, Good morning, Ben. Good morning, Joanna. Two for me as well please. You mentioned obviously the pricing you took in 2021 and in Q4, but that pricing, you said, I think, didn't have really any impact on volumes, particularly in the year. Is that your base case assumption as you look forward into 2022 and embedded in your organic revenue guidance, if you like? And given we've got some obviously widespread inflationary pressures on the consumer. Do you think there's a greater risk that we see, greater volume impact from pricing sort of this year. So that's the first question. 41

08 And then secondly, can I just go back to the geopolitical sort of situation. Obviously, you talked about fact you've got a range of scenarios that you're potentially planning from a production standpoint. But I'm just sort of wondering, I think you source you concentrate from Ireland and France for use in Russia and Ukraine. Hope you get around that? I know if there is a restrictions on imports, you've been building up inventory in the markets in advance, can you produce locally? If you need to, that's sort Coca-Cola concentrate.

41

41 Thank you, Simon. On the first question related to pricing, in short, yes. Our base assumption for this year is what we have experienced also last year is that, the pricing would not have or if there would be an impact, it could be minimal impact from the whole pricing plan that we have for the year. And I'm saying that because, I think that is a very well-orchestrated plan exactly as it was done in 2021, which really takes into account various elasticity price points, competitive dynamic in each of the categories within each unique market. 42

30 And this is where we are carefully blending price moves in the more premium parts of the portfolio, but never neglecting and paying a lots of attention also to all the affordable options that we have in the markets as we are very conscious of the state of the consumer and we know that we are in near environment where inflation increases and price increases from various categories and players are happening. So we are very, very mindful of that. But last year is a good testament to the right approach as this should be done. And that's the reason why we have such ingoing position for 2022. 43

21 For the second question, part of the contingency plans that I said is also the concentrate supply that we have been working with the Coca-Cola company team. And those things are in place as well. In case, we would not be able to source from Europe, alternative supply points have already been arranged and they are standby on top of the fact that we are sitting on a very good level of current stock. So alternative supply points would include those from Africa as well as from Asia, and this would not be first time that we would be activating those and we know that that can work quite well.

44

15 Brilliant. That's really helpful. Thanks, Zoran.

44

19 We have the next question coming from the line of Mitch Collett from Deutsche Bank. Please ask your question.

44

26 Good morning, Zoran, Ben and Joanna. And my first question is on Egypt. I think you have reiterated that it's 30 basis points dilutive to great margin. And could you comment on what level of revenue you got in Egypt in 2021? I think we have 7.4 billion Egyptian pounds for 2020, presumably that recovered somewhat in 2021. And then my second question was on elasticity again. I things Zoran you made a comment about how it was very different by occasion, channel and package. Can you comment on where you see elasticity being higher or lower? And how that's helped inform your pricing decisions? Thank you.

45

15 Thank you, Mitch. I love the question on Egypt as we are super excited with additional Egypt into our portfolio. Let me just remind that from the moment the transaction has been done and it's been in January we have set up the integration team from our group across the functions that is working with the counterparts from the Egypt team and all of that is progressing very well. As you said, we estimate that the impact from embedding Egypt into our business will be this 30 basis points in EBIT margin. 46

04 As the whole closure of their numbers and financial statements is still ongoing. I think it is more fair to say that we will give you a more informed and proper update at our half year results. And this is when we will be able to give you more flavor on this exciting margin – market, sorry. 46

34 On the elasticity, absolutely correct. We do see that on our single serve packages, this is where our elasticity’s are lower. And on the opposite side, with some of the multi serve packs. This is where our elasticity’s are higher and this is what we take into account in terms of the pricing, but not only through pricing, but also through our pack architecture that we are doing [Technical Difficulty] because even in the multi serves, what we are doing in a number of markets is that, we are introducing those smaller entry packages, which are helping to hit the right price points. And we have seen that that has been driving household penetration, driving household penetration because consumers are finding those offerings as the relevant ones. 47

51 And then through promo strategy on those bigger packages, we are ensuring that also those frequency packages are also responding and are in tune with their electricity’s. I hope Mitch this gives you some flavor on that.

48

11 Yes, that's very helpful. Maybe just if I can follow-up on Egypt. Could you give 2019 [indiscernible] 2021?

Sorry, would you mean 2019?

48

23 Could you perhaps give 2019 revenue for Coke Egypt? We can understand how [Multiple Speakers] Okay. Understood. Thank you.

48

37 We have the next question coming from Yubo Mao from Morgan Stanley. Please ask your question.

48

45 Good morning, Zoran. Good morning, Ben. Thanks for the questions. And firstly, can I ask about marketing spend, you finished 2021 up 2% of sales, now given the uncertainty in our phase, should we expect that to catch up to the pre COVID level as you indicate previously? And can you perhaps give some color on where you’ll be focusing on the marketing dollar? And second question on Costa. I think you've mentioned target of low to mid-single digit market share for 2025 is that across all the country markets? And what are the key variables that you have to get right to get that. Thank you very much.

49

26 Hi, Yubo. So if I understood you asked in the first question, because the line was little bit cracking was, on marketing spend behind these things it's going to go. Did i get it right.

49

40 That’s right.

49

43 Exactly. Yes. So listen, marketing spend follows our strategic priorities. They start with categories. Behind those that I always reiterate as sparkling supporting innovations that we are doing in sparkling, primarily in the space of low and zero sugar variants that we are introducing across all brands in sparkling further on behind energy, of course, Costa requires more marketing investments. And as we also have experienced to a degree last year and we hope that this will continue as markets reopen. Part of our out of home recovery and seasoned plans, this is where a number of our marketing spend is going. So that we are fully ready, not only for the season, but already for the pre-season. And then, bearing in mind that we have a strong joint value creation calendars with our retail customers, by that, I mean, modern trade, organized trade customers, this also consumes a good part of our marketing spend between a variety of promotions and activation that we are doing with those customers. 51

23 And then I need to ask you, Yubo, if you can just confirm your question on Costa, it was exactly what?

51

33 Yes, sorry. I think on one of the slides you are mentioning the target for low to mid-single digits market share by 2025. I was just wondering, is that across all the country markets that you have? And related to that, what are the key variables or key priorities since you rights to achieve that target.

51

57 Clear, clear. Low single to meeting single digit target is for the whole -- as a blend of the whole categories because the 9 billion value of -- distributor value is value across all of our markets. However, with Costa we start from different starting positions in some of the markets. Like for example, Poland is our strongest market because there was already good legacy business that Costa had, it has largest number of coffee shops in [indiscernible]. That's not what we are doing, but obviously, the consumer awareness, knowledge of the brand, brand strength in Poland is stronger than in the markets where we are starting from zero. 52

47 So this range of share will come as a result of the fact that we will be having different share positions over time in different markets. But one common thread is that, I do expect that our share position will continue improving in every single market.

53

13 Okay. Thank you very much.

53

16 We have the next question coming from the line of Edward Mundy from Jefferies. Please ask your question.

53

23 Good morning, Zoran, Ben and Joanna. Two questions please. The first is really kind of coming back to your statement that you've taken pricing in 95% of markets with no impact on volumes. I think you very helpfully shared with us that sort of half of the revenue per cases price and probably a quarter is category and a quarter is packed. I guess the question is, of that half that's priced, how much of that is actually headline pricing and how much is actually better premier effectiveness? And then the second part the question is, do you think there's going to be a similar blend of drivers to pricing mix going into 2022 of those 3 elements price channel -- price category and pack. That’s the first question. 54

08 And the second question is come out to your point that B2B is now 8% of total orders, up from 2% in 2020. Could you talk to what is the most developed market you've got and how much of total orders is B2B within that market?

54

28 Thank you, Ed. On the price mix, headline pricing was important contributor last year. I would estimate that around 50% of our price mix improvement came from pure pricing and that is headline pricing. And then the remaining came through package mix and category mix. And then I just need to remind that in our case, as you see very strong growth of Russia, Nigeria, and Ukraine. There is always a portion of the negative geographical mix. But coming back, what I understood. Your question was about headline pricing. Yes, that's what we've been doing -- that's what I referred to in all markets, but two markets. And also headline pricing is part of our plan for 2022. 55

33 Ed, does that answer -- does it answer properly what you had in mind?

55

39 It doesn't. I guess the question is, to what extent will category and pack mix also be an important drivers going into 2022 in addition to headline?

55

49 Yes. Sorry, I missed that. Yes, it will be, because when you see last year, in our emerging markets out of home had a very good performance. However, developing in established markets have still been double digit minus versus 2019. So from today's visibility, this is where we also expect that developing and established markets will hopefully properly operate and that will help us to drive our package mix with single service that will perform -- that will perform better. 56

34 And I also expect that category mix also will be again a positive one. As we do expect sparkling and energy and coffee, which is accretive to our price mix that those will be also a tailwind to the whole price mix that we plan. Yes.

56

59 Thanks. And the second question around your B2B platform, which was 8% of total orders, up from 2%. Could you talk to [Multiple Speakers]

57

09 Yeah. So I'm so much into pricing that I forgot about B2B. So I would highlight Russia as a very good representative, actually very strong representative market that demonstrates how fast we are adopting and accelerating. In 2020 Russia had a low single digit percentage of orders done through our customer portal. That now has exceeded 30% or around 30% of all orders in Are coming through our customer portal, which is tremendous, because we are talking about, I think, 40,000, 50,000 already being there. So Russia leads the way. However, other markets -- and I can say now customer portal being active in 26 of our markets, everywhere we see that they are ramping up and accelerating. And -- but Russia, to come to the essence of your question is the one really showing the -- showing and leading the way.

58

26 Great. Thank you.

58

29 We have the next question coming from Fin Ryan from JP Morgan. Please ask your question.

58

36 Good morning, Zoran, Ben Joanna. Two questions for me, please. Firstly, actually directly following on from Ed's last question there. I'm wondering, in terms of the impact you've seen on your overall transactions from your digital B2B platforms, have you also seen any notable improvement in product mix or in the assortment and the revenue per transaction with the customers that are fully aligned with your B2B system? 59

06 And then secondly, just with regards to your Wabi digital platform. I think you've said that that's now online in Nigeria and Russia. What are your plans for the expansion of that particular service? And how will the rollout of that be accounted for in your P&L in terms of the third-party volumes that go through the platform? And then secondly, just as a follow-up to question in terms. I think you said that you would expect the volumes in the established and developing markets to get back to 2019 levels this year? Would that be -- did I understand that comment on the call, right? I mean, is that what would be the main delta in terms of the volume recovery in your established and developing markets for '22? Thank you.

60

01 Thank you, Fintan. On online, yes, we do see -- we do see a little bit of a different structure of sales in a positive sense. We do see more of single serve packages being sold through online, interestingly also low and zero sugar variance also being sold to higher percentage than through the regular channel channels. And I think this also comes from the fact that, as we cooperate and partner today with online sites or brick and mortar customers or pure play e-retailers, there is a targeted approach that really takes into account intelligence of the sites, segmented consumer and shopper base. So we really see how our teams that are working with customer teams are leveraging that. And I think that this kind of results are great testament to those insights put into relevant communication on sites that drives the results. 61

17 On Wabi. Yes, we took intentionally putting Wabi together Coca-Cola company team to two of our largest markets, two very different markets, exactly for the purpose that we can learn fast. So while we are ramping up, and as I said, there is a quite good early take up and how we are driving GMV from month to month and expanding the customer base. We also capture learnings every single month, which helps us to continuously evolve the platform. And yes, we do plan to extend that further. Having in mind that we will be also adjusting that platform to the circumstances of different markets, because for example to operate in Italy, where the market structure is quite different than Nigeria or Russia, we are actually preparing a version – a version of debt platform, which will be hugely for Italian market, but I will be glad to say more on that, probably already on the next call. 62

40 And then on established and developing, very good, you give the chance to clarify. We do expect the developing segment volume will pass the 2019 level, whereas established, we see that it will go towards that trajectory, might not yet reach 2019 levels. So in our plans is that it's going to still be a bit below 2019 level.

63

15 Great. Thank you. Very clear.

63

20 We have the next question coming from Charlie Higgs from Redburn. Please ask your question.

63

26 Good morning, Zoran, Ben and Joanna. I hope you are well. My first one is on Nigeria where we've had two very strong years in a row. I was wondering I you can give a bit more color on the sugar tax that was implemented there at the start of 2022? And just looking forward, is there any reason that Nigeria shouldn't continue on this kind of very strong double digit growth trajectory? 63

48 And then my second question is on reusable packaging where the Coca-Cola company now has a target of 25% by 2030. Can you maybe just give some thoughts on that and how it apply across some of your markets? And then also maybe a bit of the early learnings from the DRS schemes launched in Slovakia and Latvia, please? Thank you.

64

11 Thank you, Charlie. So, sugar excise tax in Nigeria. So it came back, it was already there a number of years ago. So it came back with the latest bill and it's valid for 2022. As a reminder, it is NGN10 per liter. And even though it's effective from January 1, the actual mechanics of how it will be collective is still being worked out. However, we are fully already accounting for it and we are taking it into account from January 1. 64

55 Needless to say that, as with any other such taxation in any other country, we are passing it on through our pricing. In this NGN10 per liter is approximately 6% price increase on average for the impacted portfolio, and effective portfolio is around 80%, 85%, 87% of our portfolio, because it's practically everything excluding water. I hope -- yes, I hope that's clear and I don't see that this tax should have any significant impact on the momentum that we see in Nigeria. 65

44 On your question of should we expect double digit, yes, we should. We always say that Nigeria fundamentally is a double digit growth market with absolutely tremendous potential. Yes, sometimes you never know in Nigeria whether something happens and then there is maybe a year where there might be a slowdown. However, from today's visibility, we don't see anything coming our way. We do expect that this year's performance will be a double digit one. I don't expect that it's going to be at the level like 2021, which was really, really strong. However, that it will continue providing a strong performance. Yes, that's our expectation. 66

32 Moving onto your second question, which was about the recent announcement from the Coca Cola company 25%, yes, fully not only aware, but this came also through global alignment and consultation and discussion, because we are all in these together. So all our plans, all our plans short term as well as those that we will develop to ensure that we reach that goal are done together in conjunction with the Coca Cola company team and a number of things are already embedded in our -- even this year plan as well as the next year's plan -- plans. This also includes a number of various trials and pilots that we are doing in several of our markets that include various, either a fillable or even package less solutions. So a lot is going on -- a lot is going on with this. That is our big priority. 67

42 And one of the reasons that we have end of last year also launched our Coca-Cola HBC venturing Challenger was specifically behind sustainability and packaging area where we have invited startups to give us or submit their ideas so that we can see those with which we could partner and that will help us advance this agenda. That again, as I repeat, we do fully aligned with the Coco-Cola company team. 68

22 Charlie, does that answer your question?

68

24 Yes, that's great. Thanks Zoran.

68

28 We have the next question coming from Mandeep Sangha from Barclays. Please ask your question.

68

35 Hi, good morning, Zoran, Ben and Joanna. Thank you very much for taking our questions. My first one relates to margin leverage. Historically, you did share sort of margin leverage where you said that 1% of volume growth led to sort of 25 basis points of margin expansion and 1% of price mix growth to 70 basis points of margin expansion. Obviously, that changed historically over the years due to utilization, et cetera. Could you maybe share sort of more an updated margin leverage flow through at all? And my second question sort of relates to an earlier coffee question. You've mentioned that you hope to sort of launch Costa Coffee across all of your markets by FY '23. Could you maybe sort of share the phasing of that and how much you think could come into FY '22 given sort of out-of-home restrictions are easing this year? And you also mentioned that you sort of see as a couple of hundred million dollar -- sorry, EUR100 million worth of revenue over the next couple of years. Is that still the case? And how do you sort of see that acceleration happening as markets reopen? Thanks very much.

69

42 Yes. So Mandeep, yes, just briefly on that margin leverage thing to say, I think that this 25%, 75% that we've been providing, that was quite some time ago. So I think we have evolved where I would say that that ratio and Joanna and the team will come back exactly how much. But from the top of my head, I would say that for sure, it's more balanced. It's not so polarized as it was in the past. So I think that definitely it's a more balanced, but where exactly the line is, Joanna, will come back. 70

23 And on coffee and Costa, our ambitions with Costa, but overall coffee play is a big bet for us and we are very determined on it. So the fact that out of home part of the market will continue with reopening and operating this year versus last year is an opportunity for us. I'm very encouraged with the fact that already last year we have penetrated and recruited around 4,000 away from home customers and we will continue doing that this year, especially knowing that Vergnano has a very premium proposition is primarily focused behind the out of home customers. So when I mentioned earlier, that our low to -- low to -- low single to mid-single digit share ambition by 2025 in the market of EUR9 billion, that gives you the indication of what's the range that we are shooting for by 2025. So definitely a year on year acceleration that we are -- that we are seeing. Does that [Multiple Speakers]

71

52 Thank you very much. Yes. Helpful. Thank you.

71

56 We have the next question coming from Alexander Gnusarev from VTB Capital. Please ask your question.

72

05 Congratulations on strong results. I have couple of questions. The first one, can you just approximately elaborate about the Egypt market, how much of its possible contribution in your total volumes we should expect for this year? And the second question is, it's really hard to quantify or to comment on this one now, because it has been asked couple of times I assume. But how is the current geopolitical situation going to possibly impact few operations in Russia and Ukraine in more details, if you could comment on that? Thank you.

72

47 Thank you, Alexander. So, briefly on Egypt, as I said -- as I mentioned, we will come back -- we will come back with a proper more light on Egypt once everything has been done and dusted. So we will do that in the next calls. And I need to apologize, Alexander, I lost you on the second part of the question. Can you just please repeat that?

73

14 Sure. So the second question was about the Russia and Ukraine. Is it possibly, could approximately quantify how much the geopolitics could impact the operations separately in Russian and in Ukraine?

73

32 Yeah. So look, as we said earlier, depending how the whole scenario -- how all these will unfold and which direction, we really monitor that situation. As we said, if the currency deteriorate further then it would really put us in the lower end of our guidance that we provided today. And of course, I mean, if there is a significant deterioration, then we would need to provide an update on the following call, which we hope will not happen. However, I think it's fair to say from where we stand today that we really need to observe what will happen in the next days and weeks, and we will give you more fair assessment of that in our next call.

74

30 Okay. That's clear. Thank you very much. Have a nice day.

74

35 We have the next question coming from Alicia Forry from Investec. Please ask your question.

74

42 Hi. Thanks for the question. Sorry, my line hasn't been great. So, apologies if you answered this. Your established market volume outlook for volumes to approach, but not quite reached 2019 levels in 2022. I was wondering if you could comment on what level of summer tourism you are expecting for those markets in the segments that are dependent on it, such as such as Greece, Italy, Switzerland? And then the second question is, can you confirm the percentage of your volumes that are sold in returnable glass bottles in Nigeria and would be interesting to know. Thank you.

75

28 You said the returnable glass in Nigeria and?

75

31 And in Egypt, if that's [indiscernible] feature there?

75

38 Okay. So let's go to established markets. So as I said, the established markets -- established markets were still down versus the 2019, around 3.84% and all markets -- established markets around mid-single digits, 5.6%, 6% down where all the markets were we're down. Now, the thing is that, exactly you are pointing to the right thing that's tourism in those markets really could not perform last year. We do expect that this year we will see better tourism figures However, we are not really able to estimate to which degree. That's why we are saying that established markets will for sure go towards 2019 level, but really be able to cross it, we cannot say yet. 76

48 For example, we know that tourism in Switzerland has been significantly affected. In Italy, even though last year worked fairly well, but still the tourism was like mid-teens down versus 2019. So we do expect that it will come back too in 2020. That's with solid certainty, but what we can assess is the actual magnitude to which extent this is going to happen. 77

21 And on Nigeria, RGBs are solid. I mean, actually that's the largest part of our business. It's -- I don't know from top of my head. However, Joanna I will come back and revert -- and revert on this. But I would estimate that it must be somewhere around 30%, 40% RGB business in Nigeria. And for the Egypt, we will come back in the next calls. Thank you.

78

04 There are no further questions at this time. Please continue.

78

22 Well, at the end, let me just thank you all for your time and all your questions in today's call. Let me just reiterate that, we believe that the results we have announced today underline the fundamental attractiveness of our markets and industry, as well as the strength of our business and people. And while clearly, there are uncertainties and challenges to come we are well prepared to capture the growth opportunities ahead. We look forward to speaking to all you soon again. Have a great rest of the day. Thank you.

78

57 Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect your lines. Thank you.