Question-and-Answer Session
Operator
(Operator Instructions) We will take our first question from Judy Hong with Goldman Sachs.
Judy Hong - Goldman Sachs
In terms of the volume outlook in North America, clearly the third quarter you had a lot of factors that negatively impacted the volume trend in the quarter. But as we look out in the fourth quarter and beyond, you are starting to lap the sizable price increases last year. Can you give us some perspective on how you think the volume behaves in North America?
John F. Brock
Let me ask Steve to answer that question.
Steven A. Cahillane
We are only now really starting to cycle the price increase from last year. Obviously it went in post Labor Day and it went in in a staged way, so it is still early. Halloween week is happening right now and we are optimistic we are going to have a successful Halloween. Thanksgiving and Christmas are still in front of us. It’s important to note we hope that the consumer sentiment picks up. It’s been a difficult environment here in North America, as everybody knows. But just like we did in the third quarter, you know, rest assured we will control what we can control. We will strive for flawless execution in the marketplace. We are going to continue our initiatives in driving cases on display and driving new outlet acquisitions in the on-premise and overall, a real strong focus on our marketplace execution. We are going to continue to manage our OpEx and our labor with great intensity so that regardless of what happens with fourth quarter volume, we are confident that we will still deliver a very strong result.
But wrapping that all up, obviously we said that this year in terms of volume would always be very lumpy, with the third quarter representing by far our biggest challenge. It was. I think we managed through it very well and we are optimistic that the fourth quarter will certainly from a volume perspective be better but it is still pretty early in the day.
Judy Hong - Goldman Sachs
Okay, and Steve, just in terms of pricing environment in North America, have you followed the Pepsi system’s price increases post Labor Day? How would you characterize the promotional environment in North America?
Steven A. Cahillane
Well, we are always looking at pricing and the opportunity to take the right price in the marketplace. We’ve done that all year. We’ve led a strong price increase that Pepsi is only now following and we are happy about that. We’ve seen basically a rational approach to pricing in the marketplace, with a couple of exceptions. You know, part of the third quarter softness was driven by both case pack water, down significantly as price continues to erode. But also importantly some very, very aggressive promotional discounting in isotonics, which proved not always very rational as we looked at it. But on balance, we see a rational pricing approach. We are continuing to evaluate every opportunity we have to take pricing, not only throughout the balance of the fourth quarter but importantly as we enter 2010.
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