The Pepsi Bottling Group, Inc. F3Q09 (Qtr End 09/05/09) Earnings Call Transcript

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2009-10-06 12:07:10.0

Tags: Category, Call Transcript, Earnings, Pepsi Bottling Group Inc., CSD, CSD Business, Water Business, Food & Beverage, Branding, Manufacturing, Marketing, Seeking Alpha, Petrobank Energy & Resources Ltd.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Judy Hong - Goldman Sachs & Co.

Judy Hong - Goldman Sachs & Co.

Eric, I was wondering if you could give us a little bit more color in terms of the volume trend in the U.S., CSD versus non-carbs and then by channel, the single-server or versus take-home.

And then you've talked about the LRB category hasn't really returned to growth at this point. Do you have any expectation in terms of when the category will return to growth?

Eric J. Foss

Let me have Rob take that.

Robert C. King

The category in the third quarter, total LRBs in our markets, was down about 2% versus prior year. And that's relatively consistent with year-to-date trends.

The CSD business is performing a little bit better than the non-carb business. CSDs were down low-single digits. Our CSD business was actually flat in the quarter so we gained share.

The water business is about flat overall, when you combine measured and unmeasured channels. And then the non-carb business was flat to down modestly.

So the category is still under pressure as consumer spending is still relatively weak in the marketplace. I think consistent with what we've seen throughout the first couple of quarters as well, we're seeing healthier trends in our channels for at-home consumption. So the grocery business and the large format business where consumption is for home, those channels are healthier, while away-from-home consumption, like food service, tends to still be weak.

So what I would suggest is overall, the category still has a little bit of pressure in the marketplace but we feel very good about our progress. We've been focused on leveraging our brand portfolio and particularly pleased with our progress in CSDs. We stay focused on execution and service and winning at the point of sale. And I think you've seen that we've continued to focus on driving the right type of value and managing our revenue and margins in the marketplace and really leveraging our costs to get to solid business performance in the marketplace.

Eric J. Foss

And the only thing I would add is that obviously the continued economic conditions, GDP, unemployment, consumer concerns in the U.S. are continuing to not just put pressure on the LRB category, but other categories. And so I think Rob described the category dynamic well.

Operator

Your next question comes from Lauren Torres – HSBC.

 

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