Our Chairman and CEO in conversation

Damian: There are many achievements to be proud of in 2022 but, as always, nothing would have been possible without our great people and so I would like to extend my sincere gratitude to everyone at CCEP for another year of incredible commitment and hard work.
I am delighted with our financial performance in 2022, achieving strong top and bottom line growth, value share gains and an impressive level of free cash flow.
Key to this was the continued recovery of the away from home channel, supported by the return of travel and tourism, a record Ramadan period, and resilient demand in the home channel. I am also extremely proud of the way we successfully navigated various supply chain challenges, ensuring our products were available on shelf and online, and maintaining our high levels of customer service.
We also celebrated our first year as Coca-Cola Europacific Partners in May, and continued to make great progress against our sustainability commitments - both of which I'll talk more about shortly. I am very proud that we shared in all of our successes with our retail customers, having delivered more revenue growth for them than any of our peers, highlighting the strength of our customer relationships.

Sol: I am really proud of the progress we've made in making CCEP a great place to work. In our first full year as Coca-Cola Europacific Partners, we have already created a collaborative and inclusive culture. We've invested in our people, their safety and skills and are creating an environment where everyone can share their ideas and be empowered to collaborate, win together and grow.
Through our close alignment with The Coca-Cola Company, and thanks to our experienced leadership team and Board, I am proud of our ability to deliver consistent value for our customers and shareholders, and to support our communities.

Damian: Despite the current dynamic macroeconomic and inflationary environment, we believe we are well placed for 2023 and beyond. We operate within robust and growing categories, with great brands, that our consumers love. We will continue to invest and innovate in these brands and their packaging, supporting a solid growth platform for our customers.
We will also continue to actively manage our headline pricing and optimise our promotions through smart and digitally led revenue and margin growth management, giving us confidence as we move into more uncertain times. And of course, our people and our sustainability commitments will continue to be key areas of focus.

Sol: As we continue to face a highly uncertain economic environment, it is clear we must sharpen our focus on driving profitable revenue growth and delivering best in class customer service. The strength of our brands, the great partnership with TCCC and our leading capabilities give me confidence that we will continue our consistent track record in 2023.

Damian: The more time I spend in our API region, the more excited I get about the opportunities ahead. The API business had a fantastic 2022, with revenue and profit ahead of 2019, and is moving ahead with its strategic priorities at pace. In Australia, we have already made good progress with the simplification of our portfolio and a reduction in promotions. We are sharing learnings and best practices in both directions in areas such as IT infrastructure and data analytics. There is so much to learn from the teams in Australia and New Zealand. They are really setting the benchmark for world class execution.

And I’m even more excited about the transformation opportunity in Indonesia, with more focus on our core sparkling and tea categories allowing us to manage our supply chain more efficiently and deliver even better service to our customers across key calendar events like Ramadan. I am really pleased that in February 2023 we announced the purchase of TCCC’s 29.4% minority stake in our Indonesia business, increasing CCEP’s ownership to 100%. This now simplifies our ownership structure while demonstrating our commitment to the future of this market.

Sol: I’ve been very fortunate to join Damian and the Board in visiting our API markets over the last year, and the growth potential of these regions is truly exciting. We have a strong track record of creating value in developed markets and we are applying these learnings to Australia and New Zealand, while we are already seeing great early results in Indonesia, one of the world’s more populous and attractive emerging markets. Our journey in these markets is really just beginning, but I’m very proud of everything we’ve achieved so far.

Damian: Ultimately, we believe we can grow ahead of the category, led by our great brands and best in class capabilities; all underpinning our objective of ~4% revenue growth^(A)(D) over the mid term. We expect our category to grow 3–4%(B) on average each year, with faster growth from API and in particular Indonesia, which creates an exciting opportunity for us.

We will continue to invest in the capabilities and technology that our people need to win. This, alongside our ongoing focus on cost control and productivity efficiencies, should drive ~7% operating profit growth^(A)(D) and an impressive annual free cash flow of ~€1.7 billion^(C)(D) over the mid term.

Sol: We’re striving for a bigger and bolder future by focusing on profitable organic revenue growth. We have a lot to do, but as we build on our current momentum, I am confident that we have the right strategy to deliver on our new ambitious mid-term targets.

(A) Comparable and FX neutral growth
(B) Internal estimates based on Global Data 2023-2022
(C) Free cash flow after ~4-5% capital expenditure as a % of revenue, excluding payments of principal on lease obligations.
(D) Non-GAAP performance measure. Refer to ‘Note regarding the presentation of pro forma financial information and alternative performance measures’ on pages 74-75 for the definition of our non-GAAP performance measures.

Damian: Digital is a key enabler of growth for both CCEP and its customers. Today, approximately 85% of our sales volume is captured digitally, and while we have built a strong foundation, we continue to learn and build the relevant capabilities to further optimise our digital footprint. We will continue to partner with our customers, leveraging our data and analytics tools, to optimise revenue growth opportunities, and we have been taking learnings from Australia and New Zealand in this area. We will continue to build out our digital commercial tools to enable our front line colleagues to better engage with and sell to our customers.

We’ve been accelerating our business to business (B2B) platforms to make it even easier for our customers and wholesalers to do business with us. We have two winning portals – my.CCEP.com in Europe and Indonesia, and myCCA.com in Australia and New Zealand – collectively processing around €2 billion of revenue, up 50% versus 2021. We will continue to develop the existing functionality to drive ease of ordering, profitable basket growth and account management services. And through our Ventures programme we will continue to partner with eB2B platforms such as Kollex and StarStock to make it even easier for our customers to order our great products.

Sol: We are conscious that, as the pace of change in consumer behaviour and technology accelerates, we must look for ways to evolve our business. Since the formation of CCEP we have been re-engineering CCEP’s business processes to be simpler, more standardised and fit for the future, particularly within the workplace and across our supply chain.

As we continue on this journey, we look forward to the benefits that standardised systems and processes will deliver for CCEP; more automation and speed of execution through central decision making and faster integration of new businesses, as well as the competitive edge that comes with reduced operational complexity and controlled costs.

Damian: CCEP’s ambitions for growth and sustainability depend on our great people, and the wellbeing and safety of our colleagues remains our number one priority. Despite being recognised for our world class safety performance, tragically two of our Indonesian colleagues lost their lives during the year while at work. We have learnt lessons from these terrible tragedies and we will continue to prioritise and drive further health and safety improvements.

Sol: Our success is driven by our great people and I’d like to thank Damian and the leadership team for creating the winning and inclusive culture that CCEP has today. We had very strong participation in our first global digital engagement survey with a stable engagement score overall, ahead of our benchmark group – a great result in what has been a challenging environment as we establish new ways of working post-COVID-19 and the integration of the API markets.

In addition, I am grateful to my fellow Directors for their contributions and support during 2022. In particular to Jan Bennink, Christine Cross and Brian Smith, who will retire from the Board at the Annual General Meeting (AGM) in May 2023.

Damian: We are continuing to invest in digital workplace tools and aspire to make it even easier to move and develop internal talent across CCEP. In 2022, we rolled out our digital Career Hub across Europe, which provides users with personalised recommendations for vacancies, career paths and networking opportunities based on their personal profiles.

I also want CCEP to be a place where different perspectives and insights are valued at all levels of the organisation, and we will continue to put diversity at the heart of our culture. Promoting gender equality is a key driver of innovation and growth, and we are committed to achieving more gender balance in our leadership roles. Our diversity and inclusion credentials continue to be recognised externally too, and we are proud to have recently been included in Bloomberg’s 2023 Gender Equality Index for the third year in a row.

We will also continue to support our communities and have committed to supporting the skills development of 500,000 people facing barriers in the labour market by 2030.

Damian: Sustainability is fundamental to everything we do as a business, and we will continue to push ourselves to go further and faster to decarbonise our business. I am pleased that our This is Forward commitments were extended to our API markets in 2022, resulting in a unified action plan that we will work towards in 29 markets across the world.

We continued to make great progress against our commitments in 2022 and are taking action where it matters most. In Europe, we launched tethered closures on our PET bottles in seven markets and moved all our brands in France to returnable glass bottles within the HoReCa channel. In Australia and Indonesia, we are investing in new PET recycling facilities. These collaborations are a step closer to creating a circular economy for PET and will contribute to further accelerating our journey towards stopping using oil-based virgin plastic in our bottles by 2030.

Four more of our production facilities became carbon neutral in 2022, totalling six to date across different markets, and we achieved 100% renewable electricity purchase in Europe and New Zealand.

Sol: We have made strong progress since This is Forward was first launched in 2017. However, the social and environmental challenges we face – including climate change and the plastic waste crisis – are greater than ever.

We still have a long way to go to meet our long-term targets, and must continue to leverage our business and our brands to build a better shared future for people and the planet. Our progress continues to be recognised externally and we are proud to have retained our coveted CDP and MSCI ratings for the seventh consecutive year, demonstrating the focus and importance we place on sustainability.

CCEP was also recognised for its sustainability leadership within the Coca-Cola system by winning the prestigious 2021 J.Paul Austin Award. I am proud that we were chosen based on our considerable progress with sustainable packaging, including the use of 100% rPET in four markets; our ongoing collection efforts; expansion of paperboard packaging for multipacks; and pioneering tethered closures.

Damian: CCEP has always been closely aligned with TCCC strategically and we continue to develop our joint long-term growth plans to better align our portfolio, focusing on the core. This includes the reorientation of our portfolio in API, now substantially complete, allowing us to have a more coherent category vision for our customers. A new aligned and clear flavours plan in Australia is already delivering great results driven by smaller pack formats and a focus on no sugar and innovation, for instance the launch of Sprite Lemon+.

Together with TCCC, we are excited to launch Jack Daniel’s & Coca-Cola RTD inspired by the classic bar cocktail, across some of our markets in 2023, and will continue to scale existing brands like Costa Coffee and Fuze Tea.

Sol: Both companies are truly aligned on strategy, sharing the same vision of where we’re going and how to get there. This strong relationship is also driving forward our sustainability strategy, which is closely aligned with TCCC’s global World Without Waste strategy.

Damian: Our success will continue to be driven by our great people, great service, great beverages, done sustainably. We are now a bigger and better, more diverse and resilient business, enhanced by the recently acquired API business. We have delivered over €5 billion of shareholder returns since 2016, demonstrating the strength of our business and ability to deliver continued shareholder value. This remains our key priority for 2023 and beyond. We have the platform and momentum to go even further together for a greater future.

Sol: From the great people who work at CCEP, to the experienced leadership and strategy we have in place, and our strong commitment to sustainability, I’m confident we can succeed. On behalf of the Board, I thank everyone working at CCEP for their hard work, agility and commitment. I’d also like to thank all of our shareholders for their ongoing support. We look forward to continuing our journey with all of our partners and stakeholders in 2023.