Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Kaumil Gajrawala – UBS
Kaumil Gajrawala – UBS
On price mix, it feels that the industry as a whole is a little more realistic perhaps on volume expectations now for LRB and I think that makes pricing more of a priority then it had been in the past and so assuming that’s the case and we’re going into a maybe stabilized COGS environment, are we looking like we’re going to leverage like we had in the past where you’re looking at almost three times impact on profits if you were to take pricing versus volume and then how aligned are you with PepsiCo on an idea of pricing over volume and then does this change your long-term views on CapEx?
Eric Foss
First of all I’d say our over-arching objective continues to be to drive a balance to the top line. I think the reality of the marketplace in which we’re competing today though where commodity increases continue to go up, you’ve heard me mention before that we’re big believers that we want to cover those commodity increases with pricing and make sure we insulate our per case margins.
Having said that, I think we’ve been successful in implementing post-Labor Day price increases and I think the environment is pretty rational but one of the things that we’re doing as I mentioned is we’re focused on this re-conceptualizing pricing and package and we actually believe there are three objectives to that; better consumer value, better volume performance for the category and improved margin.
So I think the reality is, is that we continue to be aligned with PepsiCo on what actions we and they are taking to deal with the marketplace challenges but I believe right now its very important given the commodity increases that we, as you’ve seen us do this year, we’ve taken the pricing necessary.
Alfred Drewes
Obviously you heard me say we’ve cut our CapEx by about $100 million this year versus last year and I think it’s pretty important in this environment to have a real sharp pencil around CapEx and that’s something we’re going to be doing as we build our plans for 2009.
Kaumil Gajrawala – UBS
Can you talk, you’ve got about $1.3 billion in debt coming due next year and the credit markets look a little different then they have in the past so can you talk about any contingency plans and just how you feel about that?
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