Coca-Cola HBC AG (CCH) Earnings Call Transcript & Summary

Thank you for standing by, ladies and gentlemen, and welcome to the Coca-Cola HBC Conference Call for the 2026 Half Year Results. [Operator Instructions]. I must also advise that this conference is being recorded today, Wednesday, 5th of August 2026. I now pass the floor to one of your speakers, Jemima Benstead, Head of Investor Relations. Please go ahead. Thank you.

Good morning, and thank you all for joining the call. I'm here with our CEO, Zoran Bogdanovic; and our CFO, Anastasis Stamoulis. Zoran will begin with the strategic highlights from the first half. Anastasis will then take you through our financial performance and outlook in more detail. We will then open up the floor to questions. Please keep to one question and one follow-up, waiting for us to answer the first question before moving to your follow-up. We have about an hour for the call today, which should give plenty of time for a good discussion. I will also remind you that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements in our results press release this morning and at the end of our slide deck. With that, I will turn the call over to Zoran.

Thank you, Jemima. Good morning, everyone, and thank you for joining the call. I'm very pleased with the progress we have made in the first half of 2026. We delivered broad-based, volume-led growth continue to gain market share and invested behind the opportunities that will support our future growth. Let me highlight 3 key takeaways from the period. First, we continue to deliver high-quality top line growth. Organic revenue increased by 9.6% with organic volume growth of 7.5%. Volume growth was led by Sparkling and Energy, two of our strategic priority categories with marketing campaigns, innovation and execution, all playing a key role, while Q1 benefited from 4 additional selling days, we saw an acceleration in our underlying performance in Q2 to 5.8% growth with all 3 segments contributing, making it the 13th consecutive quarter of volume growth. Second, we translated this top line performance into strong profit delivery. Gross margins expanded strongly, which allowed us to step up marketing investments and still deliver strong organic comparable EBIT growth of 15.2% with margins up 60 basis points. Comparable earnings per share also grew 15.2%. This strong performance has allowed us to upgrade our guidance for 2026, which Anastasis will share more on later. And finally, we continue to invest in our 24/7 portfolio and [indiscernible] capabilities, which underpins our long-standing growth trajectory and enables us to win in the market and consistently gain share. Overall, a strong first half despite the challenging backdrop. I would like to sincerely thank all our teams, customers, suppliers and partners for their ongoing efforts and support. Let me start with a major highlight of the last few months. FIFA World Cup program delivered in partnership with the Coca-Cola Company. From special addition Coca-Cola and Powerade packs, to immersive brand experiences and market-specific activations, we brought the excitement of the tournament to millions of consumers across our footprint. Key highlights included our value-added promotion with Panini collectible stickers, which resonated strongly with consumers and our AI-enabled penalty kick challenge and innovative experience developed by our digital innovation hub that allowed consumers to test their skills by creating famous football penalty. We also launched Powerade FIFA play styles, a special addition range with football inspired players for the World Cup. Overall, the program has delivered strong results, supporting the positive Trademark Coke and Powerade performance in the period and contributing to share gains for both brands or the value of an activation like the FIFA World Cup extends stands beyond the immediate volume impact. It is also about strengthening the long-term relevance and equity of our brands by connecting with consumers and being present at moments that matter most to them. I'm very proud of the quality of execution in each of our markets and how our teams took this powerful global platform and translated it into locally relevant experiences, creating value for us and our customers. Let's move to category performance. Starting with Sparkling, which continues to be the core driver of our growth. Organic volumes grew 6.4% in the first half and 4% in the second quarter. Again, volumes accelerated on an underlying basis Q2 versus Q1. Throughout the period, we continue to bring excitement to the category creating unique consumer experiences through focused execution of our campaigns and our innovation pipeline. Trademark Coke grew mid-single digits with Coke Zero up mid-teens. And I'm pleased that Coca-Cola Zero Sugar Zero Caffeine continued its momentum, achieving triple-digit growth and accelerating further in the second quarter. This reinforces the strength of the proposition and the positive consumer response to the new visual identity we rolled out across 18 markets. We remain very excited about the opportunities ahead for Coke Zero, Zero, including leveraging greater consumption in the evening occasion. Flavor innovation also continued to play an important role. Sprite's ongoing momentum with volumes up high single digits was supported by the launch of the new Lemon Mint Chill flavor in 12 markets. Schweppes volumes grew high single digits, supported by the launch of Schweppes Cherry Pepper, supported by dedicated in-store displays and activations. Energy continued its exceptional growth trajectory, with volumes up over 25% in the first half. Growth was strong across all 3 segments despite tough comparatives. Monster continued to benefit from a strong innovation pipeline with key launches in the period being Viking Berry, Ultra Fantasy Ruby Red and the new Zero Sugar flavor with Valentino Rossi. We also continue to leverage MotoGP for Milan and football partnerships to deliver powerful activations. And now affordable offers in Africa also continued to perform well, particularly [indiscernible] in Egypt, supported by local marketing campaigns and the launch of a new 250 ml can. In profit, our strategic focus remains the out-of-home channel. So I'm pleased that volumes increased 24.5% in this channel in the first half. Both Costa Coffee and Caffè Vergnano grew strongly, supported by growth in existing outlets and the addition of more than 1,300 new out-of-home outlets in line with our deliberate shift in focus total coffee volumes declined in the first half, but grew in revenue. We expect the overall category to return to volume growth in the second half of the year. Steel volumes increased 5.2% in the first half with high single-digit growth in water led, led by emerging segments. Sports drinks continue to stand out with growth of around 25%. In the first half, we introduced Powerade active water in 7 markets, a new range with a diversified proposition aimed at bringing new consumers to the category and as well as the FIFA World Cup, we continue to leverage other local sporting events. Premium Spirits volumes declined 1.5% in the first half on tough comparatives and impacted by retail challenges with Finlandia in Poland that have now been resolved. Excluding this impact, the overall category volume would have been in growth and Finlandia would have grown low double digits. As I have said before, investing in our [indiscernible] capabilities is critical to sustaining our strong track record of volume, revenue and EBIT growth and continuing to gain share. I want to call out a few highlights from the first half. Through our leading RGM framework, we continue to drive improvements in mix through targeted each local market. An important part of this framework is to grow volumes and ensure profitability. Over the past few years, we have consistently enhanced our promotion capabilities and tools to create more value with our customers. At the end of last year, we began rolling out [ Promo 360 ] a single end-to-end promotion management capability across pilot markets. This transformative approach brings together people, processes and technology into one integrated platform, leveraging advanced analytics and AI to help our teams improve promotional effectiveness and drive stronger return on investment. It is now live in 7 markets and will be rolled out further this year. We also made continued progress on packaging mix with single-serve mix improving by 110 basis points in the first half. This was supported by the launch of new packs, including 500 ml PET bottle for Trademark Coke in Egypt, a 500 ml [indiscernible] in 3 markets and the introduction of 250 [ MLP ] for USD across 8 markets. [indiscernible] remains a key channel for us and here as well, we are constantly evolving our approach to capture the most value. Our new end-to-end channel approach is data-led and provides greater visibility of opportunities across the outlet universe, enabling us to focus on the highest value opportunities and tailor the right portfolio to the right outlet. Another highlight was the opening of our new digital hub in Cairo, marking another important milestone in our group digital transformation journey. This strategic hub reflects our commitment to developing difficult and building leading expertise to further enable innovation, operational excellence and support sustainable growth. All of our actions are driving clear results. As we continue to execute strongly and jointly create value with our customers, we further increased our value share year-to-date gaining 80 basis points in NARTD and 40 basis points in Sparkling. Moving on to [indiscernible] where we are carefully planning for integration so we can hit the ground running after we complete the acquisition. We continue to make good progress towards completion, working through the customary regulatory filings and antitrust approvals and preparations for the secondary listing of our shares on the Johannesburg Stock Exchange. As I mentioned at Q1, we have obtained antitrust clearances in 4 of the 6 jurisdictions. The latest development is that in July, the South African Competition Commission recommended that the Competition Tribunal approved the transaction subject to conditions as expected. We welcome this latest milestone, and we look forward to the competition tribunal decision. Overall, we remain on track to complete the acquisition during the second half of 2026. Turning to sustainability. I am pleased that our performance continues to be recognized externally. In the first half, Coca-Cola HBC receivables confirmed for the ninth time as the world's most sustainable beverage company in the 2025 Dow Jones best-in-class indices. We also achieved the highest ESG score in the beverage industry in the [indiscernible] assessment successfully maintaining inclusion in the [indiscernible] Good Index series. We continue to invest in local communities across our markets. This included the completion of EUR 4.1 million water infrastructure project in Bulgaria, helping support the long-term well-being of people and local businesses. In addition, our college received foundation committed EUR 1.5 million to support a fire protection program in Greece and the nature restoration project in Switzerland. Partnerships remain a key driver of our progress, creating both business and sustainability value, following the successful launch last year of sustainable linked business plan together with [ Carrefour ] and the Coca-Cola Company in Romania, this year, we have rolled it out to Poland. The plan focused on emission reduction, logistics optimization and tagging collection. Let me now hand over to Anastasis to take you through the financial results.

Thank you, Zoran, and good morning, everyone. In the first half, we delivered a strong financial performance. Organic revenue grew 9.6%, led by organic volume growth of 7.5%. Comparable EBIT increased by 15.2% organically to EUR 760 million, our margins improved by 60 basis points. This resulted in strong earnings percent growth of 15.2%. Finally, free cash flow was robust at EUR 216 million, slightly lower year-on-year, reflecting a planned step up in capital expenditure as we continue to invest in growth. So let me start with the top line performance. As mentioned earlier, organic revenue increased 9.6% in the first half, while organic volume grew 7.5%, underpinned by a strong underlying performance and the benefit of 4 additional selling days in quarter 1. In quarter 2, volume grew 5.8%, a further improvement on an underlying basis. Organic revenue per case increased 1.9% in the first half. In line with our plans, we delivered an improvement in quarter 2, which saw an increase in revenue per case of 2.1%. Overall, the lower revenue per case trends compared to previous years reflect more moderate pricing dynamics in a low inflation environment, particularly in Africa. It's also driven by adverse country mix as we continue to see faster growth from our African markets, which have lower revenue per case. However, we continue to implement targeted revenue growth management initiatives, supporting positive category and package mix in the period. Comparable EBIT increased by 15.2% organically and 17% on a reported basis to EUR 760 million. The main driver of this was gross profit. Our comparable gross profit margin improved by 110 basis points to 37.8%, benefiting primarily from strong recovery in the Emerging segment. We benefited from good top line leverage and easing COGS inflation in the period, helped by a good hedging position and efficiency initiatives despite the recent macroeconomic volatility. The strong progress in gross margins enabled us to intentionally step up direct marketing investments behind key events and innovations, including FIFA World Cup and Winter Olympics and the launch of the new visual identity for Coke Zero [ 0 ]. This resulted in operating expenses as a percent of revenue increasing by 50 basis points, but overall, our comparable EBIT margin still increased by a very strong 60 basis points to 12.2% on both an organic and reported basis. Let's now look at the drivers of performance by segment. I'm going to discuss these figures on an organic basis and for the first half of the year, unless I say otherwise. In the Established segment, revenues grew by 6.2%, volumes grew by 4.8%, with an underlying acceleration to 3.4% growth in quarter 2 and a good start to the summer season. Sparkling grew mid-single digits, supported by Coke Zero, Coke [ 00 ] and Sprite. Energy continued with its strong momentum and Stills grew mid-single digits, driven by good performance in Water and Sports Drinks. On a country basis, I'm very pleased with the improved performance in Switzerland with volumes up high single digits and the continued good momentum in Ireland. Revenue per case increased 1.3%, reflecting targeted pricing and positive category mix with an improvement in quarter 2. Established segment comparable EBIT increased 6.9% with good operational leverage, offsetting higher marketing expenses leading to 10 basis points of margin expansion. Turning to the Developing segment. Revenues grew 9%. Volumes grew 5.3% with 3.7% growth in quarter 2. Sparkling grew mid-single digits, driven by Trademark Coke and Sprite. Energy grew strong double digits, and coffee grew strongly in the out-of-home channel. In terms of country performance, Czech continued its strong momentum, delivering high single-digit volume growth despite a tough comparative. In Poland, volumes grew low single digit in half 1, supported by an underlying improvement in quarter 2. Revenue per unit case increased 3.5%, supported by pricing actions and positive category in Packet fix. Single-serve mix improved by 210 basis points. Developing comparable EBIT grew 1.8% with higher marketing expenses, leading to a decline in margins of 70 basis points. In the Emerging segment, revenue grew by 12%, Volumes grew 9% with 7.2% growth in quarter 2. Sparkling volumes increased high single digits, including strong double-digit growth in Coke Zero and high single-digit growth in Fanta and Sprite. Energy grew strong double digits despite tough comparatives and water grew strongly. In terms of countries, the performance of both Nigeria and Egypt has been strong in the first half of the year, with volumes up low double digits and low teens, respectively, continuing the momentum of 2025. It was great to host investors and analysts in Cairo last month for the latest bite-size investor event where we proudly serve Egypt's growth and investment journey since our acquisition in 2022. Revenue per unit case increased 2.8%, a moderation compared with recent years, this reflects both lower pricing to address lower inflation and limited currency headwinds in the period as well as adverse [indiscernible] mix as African markets which have lower revenue per case compared to the CCH average grew faster. Comparable EBIT in Emerging grew strongly, up 23.9%, driven by strong operational leverage and growth in gross profit, offsetting higher marketing expenses. Moving to the group P&L. We saw comparable earnings per sale grow 15.2% to EUR 1.51 supported by the strong EBIT delivery, partly offset by higher net finance costs year-on-year. The finance costs were impacted by higher interest expense related to the new bonds issued for the CCBA acquisition, partially offset by higher finance income on our cash balances. The first half saw a year-on-year step-up in CapEx of over EUR 100 million as we invested in growth-driving initiatives, including new production lines in [indiscernible] Egypt, supply chain automation digital and data solutions and energy-efficient coolers. CapEx as a percentage of revenue was 6.1%, ahead of the prior year period, but slightly lower than our targeted range of 6.5% to 7.5% in line with our planned phasing. With a strong growth in EBIT, we generated solid free cash flow of EUR 260 million, with a decrease year-on-year reflecting the planned step up CapEx, as I just mentioned. Moving to the outlook for the year. As we progress into the second half, we expect the macroeconomic and geopolitical environment to remain both challenging and unpredictable. Having said that, we have high confidence in our unique 24/7 portfolio and our bespoke capabilities in the growth opportunities across our diverse markets and in our people. Reflecting our strong first half performance, consistent with our planned phasing for the year and considering the challenging environment, we now expect to deliver full year 2026 organic revenue growth around the top end of our 6% to 7% range, and an organic EBIT growth of 8% to 10%. We have also updated our finance cost guidance and effect translation guidance for the year. Let me now hand back to Zoran to conclude.

Thanks, Anastasis. To close, let me reiterate the key messages from today's results. First, we delivered a strong first half performance with broad-based volume-led revenue growth, continued share gains and good momentum across our priority categories. We converted this top line growth into a strong profit delivery with double-digit comparable EBIT and EPS growth. This strong performance allowed us to upgrade our guidance for 2026, as Anastasis just mentioned. Finally, we continue to invest behind the opportunities that will support our future growth strengthening our 24/7 portfolio, our [ bispo ] capabilities and developing our people. Looking ahead, we remain confident in the strength of our business, the diversity of our markets and the capabilities of our teams to continue creating value for all our shareholders. Thank you once again to all our colleagues, customers, suppliers and partners for their ongoing efforts and support. Thank you for your attention. And let us now open the call up to your questions.

[Operator Instructions] And now we're going to take our first question. And the question comes line of Aron Adamski from Goldman Sachs.

Congrats on the results. So my first question is on the EBIT outlook. The midpoint of your guidance appears to imply low single-digit organic EBIT growth in the second half, probably some margin contraction. So could you please help us bridge the key moving parts behind that, including the impact of fewer selling days? And more broadly, does the outlook assume any moderation in the underlying profit growth for the second half? That's my first question.

So let me first start by saying that I'm very pleased with our strong first half of the year because we delivered high-quality organic revenue growth with both volume and pricing across all our segments and that translate to a strong EBIT delivery. Now as you said, looking ahead for the second half of the year, and in line with our phasing expectations, maybe you recall what we said back in our call for quarter 1, we do expect to have to grow at a lower level than half 1 bid. And correctly, this reflects 4 fewer selling days in the last quarter of the year. Now on top of that, I have to say that we are also factoring in higher energy-related cost pressure for the second half of the year in relation to the ongoing conflict in the Middle East. But overall, I have to say that we are confident in narrowing the guidance range to 8% to 10%, which reflects both the strong first half but also allow us to be prudent and capture the current unpredictable environment, especially consider that we still have 5 months ahead of us to go.

Okay. My second question is on the pack mix, which continues to improve strongly. Could you please remind us of the remaining runway to increase the single-serve mix across your business? And where do you see the largest opportunities to drive that growth? Also, it would be great to hear if you can please give us some color on how does the 110 bps improvement in package mix translates into group level price mix? And how accretive is that for the group margins?

Thanks, Aron. I'll start and then Anastasis, add if I miss something. So growing single term mix is part of our revenue growth management approach and strategy where we see a number of opportunities across all 3 segments and across all markets, across all categories. And we've been deliberately expanding. And as a priority will serve packages in our key campaigns and in overall programs, marketing programs. So the opportunity is there, as I said, across all segments, especially when we see in Central Europe and more Eastern Europe markets. This is where we see the opportunity for, let's say, wider opportunity for single-serve continues continuous growth. That's why sometimes you see us intentionally activating certain campaigns only on the single-serves. Also, there is a deliberate effort in creating shopper habit for selling multipacks of single serves in the at-home channel for the in-home consumption. On top of, of course, our stronghold of [ HoReCa ] where continuously, we are having the drives to drive our single-serves. So still a lot of opportunity to drive those.

Yes. And Aron to your question about the contribution of single-serve mix to the overall price mix, I can say that it varies from segment to segment. But for example, in the development segment, you can see that half of the revenue per case contribution is coming from the single-serve mix. Equally, I can say the same to the emerging segment. So it's part of our overall GM strategy that mix is playing a big role in driving value, which, of course, translates to profit and margin expansion, subject, of course, to the relevant brand portfolio, right? So it's overall accretive, I can say.

And the next question comes from line of Nadine Sarwat from Bernstein.

Two for me, please. First, coming back to the guidance, which you've narrowed to the top for both top line and bottom line guidance. Can you provide us some color as to what specifically surprised you in Q2 and gave you the confidence to change your full year guidance? And then my second question is on net sales revenue per unit case growth. I believe that came in lighter than perhaps some were expecting, and I appreciate the color you provided on country mix. But if I look at the 2% organic growth you printed in Q2 for the group, is that a run rate we should expect for the second half? Or are there any reasons why we would see an improvement in that figure? Thank you.

I wouldn't say that we had any surprise in Q2. We were heading into Q2 with a very strong programs. Most of all, FIFA World Cup, for which, together with Coca-Cola Company, we have prepared extensively really activating consumers through with special edition packs with promotions, with digital activation with consumer experiences. So we have really done excellent preparation, I would say, for any World Cup best so far. And also, it's already our [ preseason ] period. coupled with that is also innovation that we have been doing in the first half and second quarter, which I mentioned in my remarks. But they clearly had a good impact on both in Sparkling and Powerade and also Energy. So all in all, Q2 was in line with our expectations and with all the programs that we have. And that gave us the confidence to do this upgrade in the guidance that we just communicated. You -- in relation to the revenue per case, you will remember that we said in Q1, and it's still -- and it's valid also for Q2, that after a number of years where we really had a predominant generation of revenues through price mix. This year, we are intentionally more prioritizing and focusing on volume. However, not neglecting revenue per case or price mix which had improvement in Q2. And we do anticipate that in the second half, we will see some further slight improvement in the revenue per case. I just want to conclude, Nadine to say that this is a year where in our revenue growth management, all 3 drivers of volume, price and mix, simply need to deliver and they will. But in this algorithm for this year, volume is going to be the one that is going to take more weight in our revenue generation.

The question comes from line of Matthew Ford from BNP Paribas.

Two for me as well, please. The first one, just on the performance in Egypt and Nigeria. Clearly, the emerging segment was particularly strong from an EBIT perspective. Clearly, the growth in Egypt and Nigeria continues to do well. But my question specifically is on the kind of profitability you're seeing there and the margin expansion. If you could give any kind of color on how that margin expansion developed in the first half in those markets and what the expectation is in H2 and beyond? And I -- yes, I'll follow up with my second question.

Yes. Matthew, you're correct. The Emerging segment performance was very strong, both on organic revenue and also very strong EBIT growth of 20 -- almost 34% with margin expansion of 140 basis points. Now as I said on the call, the key driver for that starts with a strong improvement in gross profit which was, of course, helped by the very good top line performance, driving leverage. Cost inflation compared to prior year's first half was following a lower trend that we have seen. We have benefited from our [indiscernible] and productivity initiatives in those markets. And there was also a positive FX transactional tailwind, so that allowed us to drive strong profitability. While on the same time, we stepped up marketing investments in those markets. So this good performance on the margin is on the back of the incremental marketing spend. Now to your question on the second half of the year, how this will evolve, we do expect EBIT to be, of course, positive. But as I said earlier on the overall phasing these markets are also impacted by the for less selling days in quarter 4. So obviously, half 1 will have a much more -- a bigger weight as we've said. And we do expect, given the current environment, certain pressure when it comes to fuel-related cost pressures compared to what we saw in the first half of the year. But we do expect that those markets will continue to grow profitably, and we are very pleased with the performance.

That's great. And then my follow-up is just on Russia, actually. I think on the volume performance, I think we were up mid-single digit for the half. And obviously, Q1, we saw sort of low single-digit growth, but that was with the benefit of the selling day. So it feels like on an underlying basis, there was an improvement sequentially in Q2. Any color on what was driving that and sort of your expectation, I suppose, for the growth as we go into the second half where I think the comps were fairly soft. And then just staying on Russia, just 1 quick one. I know I see the Russia cash has just got above EUR 1 billion, I think, in H1. So clearly, that's generated quite a lot of interest income. Given the sort of EUR 8 million interest of net finance costs in H1, just interested to get your feel of exactly what's driving that sort of implied acceleration in the net finance costs in the second half to get to your revised full year guidance.

Thanks, Matt. Look, situation performance in Russia, I think it continues in line as in the previous years, nothing different than we see that is locally managed and locally finance business is doing as we just announced in the press release -- so really no big changes in the things happening there. Yes. Okay. A couple of points that you raised there. First of all, on the cost of Russia, yes, it's just over EUR 1 billion now. But we have to understand that the kind of phasing will not follow the same rate of growth throughout the whole year. We had the same discussion last year or the first half, it's more up from the second half. Also, please keep in mind that this cash in [indiscernible] also having a positive tailwind from the currency translation, right? So it's not just only performance. Now to the finance cost question, to be a bit more detailed now. So you've seen that for the first half of the year, the finance cost of EUR 8 million is an increase, but this came better than expected. First of all, on one thing, we have the higher interest expenses that relates to the bond that we should earlier in the year in March for the CCBA funding. So that obviously is one of the drivers of the incremental finance costs, but at the same time, we are benefiting from 2 elements. One is also a good stronger cash flow generation in markets like Nigeria compared to 2025, which means less need for local financing than it originally expected. And then there is a benefit from higher finance income, which, of course, includes also the cash in Russia. So the customers keep in mind -- the benefit there is not all held in ruble. There is an amount which is, let's say, 5% is local currency there [indiscernible] and the interest benefit is not as high as you would expect is coming lower than the market trend. And for that, given the good performance of the first half, we are also upgrading the guidance to EUR 40 million to EUR 50 million for the full year. On the second half, there is an implied increase to that cost. But that, of course, has to do with the fact that you will have 6 full months of the bond is one versus only a quarter in half -- and of course, it directly correlates to the timing of the CCBA completion. And we also expect lower finance income on the back of lower interest rates in [indiscernible].

And the question comes from of Charlie Higgs from Rothschild & Co.

My first question is on sports drinks, which had a very good performance. Volumes up 25%. And I was wondering on what your view is on the [indiscernible] titration opportunity across your markets and how you plan to make the strong growth stick from Powerade, because I imagine quite a lot of the growth came from temporary in-store displays around FIFA and the Winter Olympics.

So Powerade, while we've seen really excellent performance in Q2 and overall first half, this actually is a continuation of strong performance over the last couple of years. This brand proves excellent potentiality and relevance with consumers and with customers. So I'm very, very pleased how we've been activating this with various sporting events. Now it was FIFA World Cup, but overall, we are connecting Powerade with a number of sporting events, whether that's sponsorships with various clubs events or sports facilities. And going forward, exactly as you said, we do see the opportunity together with Coca-Cola Company in the advanced hydration. We think it's an exciting and definitely growing category. And it is an opportunity that we will be going after and doing more and more. So let's just stay tuned in, and we'll see what happens.

And then my follow-up was on energy drinks, which again, continues to perform very well from volumes. Can you maybe just give a bit more color on the various buckets of Monster versus Predator Fury versus some of the strategic brands like Burn -- and then how much innovation is coming from kind of the core range versus some of these new launches like Viking Berry? And then maybe just kind of bolting on for Anastasis roughly how much of the energy drinks do you do in-house now versus co-packers? And is there maybe scope going forward with the strong volume growth to bring more in-house to boost margins?

Yes, Charlie, Energy continues to really perform very well. This is the first year where contribution of Energy just exceeds 10% in our total volumes. So -- sorry, the -- well, I fast forward it a bit, I wish it was 10% of the volume. 10% of revenue, where the proven formula continues to deliver, which is that reformulation introduction of 0 flavors in new innovative flavors like what I said now Viking Berry. Innovation overall is a very important driver in this category of driving incremental volume and revenue. On top of that, continues very good activation and leverage of the passion points that together with Monster, we are doing across the market, whether that's MotoGP, Formula, football and also in a number of markets as well music. [indiscernible] a reminder that quarter of the energy drinkers have entered the category in the last 12 months. This just also shows that the whole category is growing, and it's present across more and more occasions, and it's quite balanced between the gender. So I'm just giving this flavor to give you more fact of why a, the category is growing, but also why we are growing faster than the category growth. We are now already in 11 more markets. We are stronger in the value -- in our shares than [indiscernible]. And we are positive going forward also with the prospect of the -- this category growth. And for the --

Charlie, our current in-house capacity -- production capacity covers about -- between 50% and 60% of the total leverage.

And the next question comes from Mitch Collett from Deutsche Bank.

I appreciate it's probably quite a small part of the portfolio, but I was really interested in the acceleration in Coke Zero Sugar, Zero Caffeine. I think you say you did strong triple-digit growth, which in itself is an acceleration on a strong Q1, where it was, I think, strong double digits. And I guess I'm interested in how big a contributor you think Zero Sugar, Zero Caffeine can be. It doesn't look like it has a negative impact on Coke Zero, which is still doing well. And can you comment on the sort of rollout strategy of that under the new branding?

Mitch, yes. Look, the Zero Sugar is really now multiyear continuously faster-growing part of the Coca-Cola trademark, and that's absolutely great. And the first half was no exception with really great mid-teens growth. But this Zero Sugar Zero Caffeine, which we are growing with triple-digit growth has been absolute hit with consumers, tapping really into the occasion. And as [ Enrique ] very well explained also in his call in Q1, this is really understanding the insight of consumers and coming up with this innovation and then creating this intimacy with consumers in every single market and follow with the integrated execution that we are doing. With a number of packs, but also focusing this in this occasion, especially in the -- from late afternoon and evening occasion where the insight is that big number of our consumers are trying to avoid the coffee. So it is continuously growing in the contribution on the whole Coca-Cola trademark as also in other flavors in flavors and -- sorry, Fanta, Sprite, Schweppes where we are also reformulating and leveraging this Zero Sugar trend. So we will -- we do expect that this trend is also going to continue and you will see us with a strong focus behind it.

And then my unrelated follow-up is on COGS. Given you called out energy pressure on COGS in the second half, I appreciate it's early, but can you just give us a bit of color on how you might think about COGS in 2027? And I guess linked to that, can you just tell us how hedged you are for '27 at this stage?