Kraft Heinz Co (KHC) June 3, 2026 Conference Transcript

Okay, welcome back, everybody. Thanks for joining us. And thank you to the Kraft Heinz Company for being with us today. For the first time as Chief Executive Officer of Kraft Heinz, Steve Kaelin is with us today, as well as André Maciel, Executive Vice President and Global Chief Financial Officer. So thank you both for joining us. Thank you. Thanks for having us. All right. So we're going to use the balance of our time today for Q&A. I... Sorry. I thought, Steve, we would just, you know, start with you, and I really just get you to describe the updated Kraft Heinz story, because I think a lot is underway, and I think investors are curious as to what's changing and what's changing for the better.

Well, again, thanks for having me, and thank you all for your interest. You know, I'd start by saying, you know, I joined Kraft Heinz in January, and I joined because I wanted to join. I mean, I really saw the opportunity in front of us as being one that was real, it was tangible, it was exciting, and it was executable. And I draw a lot of parallels towards 2017 when I joined the Kellogg Company, and I joined there because I really wanted to. I saw the same opportunity. And so what we have at Kraft Heinz is we have some of the most iconic brands that, you know, I've been privileged to work on, starting with the Heinz brand. You know, Heinz brand may be only rivaled by the Coca-Cola brand in terms of its saliency, how it's known around the world. But compare the household penetration of a brand like Coca-Cola to a brand like Heinz, and you immediately see what the opportunity is. The opportunity to grow the Heinz brand both domestically and internationally. It's incredibly exciting. And beyond ketchup, you know, so you go to the U.K. and you see what Heinz does in everything from baked beans, in ketchup, in, you know, now tomato sauce is really exciting. You see what Heinz does in the United States around condiments. It's really exciting. But we're, even with a brand like Heinz, only scratching the surface, I think. But then you look at the vast majority of our portfolio, and what you see is, again, tremendous opportunity. The brands have been, I think, underinvested in for the last 10 years. And I always want to be very careful about talking about the past because I don't want to disparage the past or what happened, but it's clear that we did underinvest in the brands. And what we have now is a real opportunity to do something different, to think about revenue generation as the most important North Star of the company, to think about our productivity as something that enables our top-line ambition and not in an end of itself. And so as we launched into January and announced the separation of the pause of the separation, I think what we saw is a real opportunity to actually take the resources that were designed against the separation and put that towards a top-line agenda to incrementally invest $600 million instead of spending $300 million in effecting the separation. So in effect, a $900 million turnaround towards resourcing a top line agenda. And what you see, I think, coming out of the first quarter is early green shoots, early, I mean, no victory laps here, but early green shoots around our share progression that's more positive than it's been in 10 years. And so that's meaningful, but it's something to build on. And we still have, you know, the rest of the year in front of us and most of that $600 million as dry powder that hasn't really even been deployed yet. So early days are encouraging. I got asked this morning, I think a great question, what's the morale of the organization? Morale is incredibly high. When you talk about restructuring, that's, you know, an anxiety kind of infused thing. When you talk about a growth agenda, that's something different. And so I'm pleased I joined. I'm pleased with our early start, and I'm really excited about the future that we have in front of us.

Great. As you say, that $600 million of incremental spend, I think, is the most visible. What's your component of your new initiatives, your new agenda? I guess you talked a little bit about this in the past, but, you know, maybe to ground everybody in the room on it. Why $600 million? Why is that the right level of spend? You know, why not more? Why not less? And how are we assured that it's not just spending for spending's sake?

Yeah, so, you know, $600 million is a nice round number, right? And I don't want to ground anybody with or trying to convince anybody that there's a false sense of precision that's exactly the right number. But we did an awful lot of benchmarking around what would be the right level of investment for a company like ours. And so we think 5.5% of net sales against marketing is a good benchmark number. That's what we get to with $600 million. We think 1% of R&D is a good number. We looked at our overhead as a percentage of revenue compared to our peers. We were underinvested. And just in my first few weeks in the organization, really talking to people in our commercial organizations around what they felt they needed, where we were lacking, that's led to our human resource plan as well. And so we think it's a really good number. We think it's the right number, and we reserve the right to get smarter. And so as we embark on this year, we're ahead of plan in the first quarter, as we talked about. If we continue to generate healthy returns against this investment, perhaps we could go above $600 million and still meet the guidance expected in terms of profit. That wouldn't be a bad thing, and that's our priority. So our priority is getting the right level of investment. And 600 million, I think, incrementally this year is the base mark. We might go above that. Do I think we'll get to 2027 and say, oh, my goodness, that's not enough. We're going to have to have a margin reset. No, I don't think that at all. I have based on the work that we did and based on the early green shoots and based on just my experience in and around this space. For many years, I feel very confident. I feel very confident this is the right number. And I feel confident we might be able to over deliver against that number. And, and again, the early green shoots, I think are early proof points, and we'll just continue to get smarter and build on that. And part, you know, part of it is, it's not just the numbers how you you know, the quality of execution.

Yeah, right.

And so really focusing on the quality of execution, how we do things, how we measure them and how we reallocate in fast ways, you know, really, We reallocate based on learning, and the learning is happening faster than has ever happened before, thanks to, you know. The technological revolution that we're in. And so I believe it's the right number. I believe we might do better than that number. And I believe that execution is the single most important element in getting the execution right.

Okay, so Andre, maybe maybe you can weigh in here and just in terms of a little bit more detail as to, you know, where that where that spend is going, where it's being prioritized. And to Steve's point, kind of the The scaffolding that you've built, you know, around the organization to learn as you're spending to double down on places that are really working and also, you know, pair back on things that have less of an ROI.

Sure. So about two thirds of the $600 million is going towards, I think, what Steve was just describing, like the commercial levers that will drive sustainable top line growth. Nate, particularly on product packaging superiority, market investment, media pressure, and commercial headcount to improve the quality of the execution. So two-thirds is going against that. One-third is on price. This price is a combination of opening price points, which we believe is highly critical in this moment that the consumers are going through, as well as a step up on joint business plans with the retailers, so we can continue to protect and expand shelving, where appropriate.

The second part of your question, just, you know, what do you what, what have you built around? You put the spend in place? What disciplines or procedure processes have you put in place to, to learn as you're spending to be able to, you know, as I say, you know, double down on things that are working and then pair back on things?

How are you torturing your colleagues to make sure that the money is working?

Yes, I'm good at that. But No, look, we have a very strong routine in place where, like, pricing, for example, which is easier to manage in the short term. Like, you have very good controls on a granular level. You might remember, we said years ago, we have a very detailed promo system that allows us to track returns on, like, more than 100,000 events in the U.S., so we have very granular visibility on that, and the revenue management team have a very strong routine that continues to learn from what's just happened to be deployed. into the future, so feel very good about the price. Marketing, we have invested a lot in last year to have very good visibility on the returns on the market investments and gets updated regularly as well. So we feel good about that. That's our topic of discussion. We have VLAN here with us that leads our European business. Like every month we go through the dashboard and how we are deploying the money, what are new ideas I have, what things are not working, how we can actively deploy the resources. So I think we're very well set up for that.

And as Steve said, most of that spending is still to come, right? It's back half-loaded. So as the spending ramps, is it as simple as market share and top-line growth, or are there other metrics that you're watching to define success?

I think the most visible metric for the investors will be the market share trajectory as well as our emerging market growth. So on market share, look, at some point last year, we were losing 90 BIPs of share, which was record high for us. We exited the last year losing 50 BIPs. Now, year to date, we are losing 30 BIPs. On the last four weeks, we're losing 20 BIPs. So things are moving rather in the right direction. And to your point, the bulk of the step-up in $600 million is concentrated in the second half, which is encouraging. Energy markets, which we still have a high degree of confidence that we can deliver that high single-digit, low double-digit growth. And we have, even in the first quarter, if you exclude Indonesia, and we talked about Indonesia a few times already, we already grew high single digits. Once you left Indonesia, which we feel good about where we're going to stand, in the second half, we're going to see the growth in the print as well, which will be very solid.

Yeah, yeah. Okay. So as you, as Andre just alluded to, Steve, you mentioned earlier, good, promising start to the year and through today. But you also highlighted, you know, along with the first quarter. Reporting, you know, some timing benefits, Easter, some pantry loading benefits, etc. So I guess when you look at everything you've seen so far, where do you see the strongest signs of real structural improvement versus, you know, other areas that might be a little bit more, you know, kind of flattered by those dynamics?

Yeah, so Andre mentioned some of it, but if you just remember back to our first quarter, we did say we got about 100 basis points because of Easter. We got a little bit more than that based on winter storms stocking up and so forth. And so I think we were very transparent around, look, the number was still not a growth number. I think it was minus 0.4 or so, but we tried to equalize that so people really had a sense of what it was. But we still felt good about it because of the market share progression that Andre just mentioned. And so we exited the year, you know, we put a new metric in place, you know, we're talking about where we're gaining or holding market share on a weighted basis for our company. We exited the year last quarter, fourth quarter of last year at about 25%. So we're only gaining or holding share in 25% of the categories. And even in US taste elevation, which is where we really have a right to win, you know, with Heinz and Philadelphia and others, we were only at 24%. So we were not winning. And if you look at Where we exited the first quarter, those numbers were dramatically different, over 50%, and with U.S. taste elevation, I believe, close to 80%. So a really dramatic shift in terms of that, and that's real, because that's market share based on where we are. And if you look at the last 13 weeks, we've held that U.S. taste elevation in the almost 70% range, so it's been holding, and it's based on the investments that were made in the back half of last year and continuing on to this year. And as Andre just mentioned, you know, we're holding or gaining market share in more than half the categories. And we're going to talk about that a lot because it's a way to hold ourselves accountable that, you know, we are committed to growing the top line of the business. And, you know, obviously, we, you know, we're all about shareholder return. And one of the most important elements to companies like ours and one of the most highly correlated to your stock prices, your organic growth profile. And so, you know, we can't control the macroeconomics everywhere in the world, but we can control how we perform within the industries, and in many cases, we're industry leaders, so part of it, industry health is incumbent upon us as well, but what we can really control is our ability to compete well in the market and gain or hold in more than 50%, and hopefully closer to 70%, and, you know, we're seeing early green shoots of that happening, and so we're encouraged, but, you know, it's a high standard, and we're going to hold ourselves to that high standard. And we invite investors to question us about that, and we'll be very transparent about how we communicate what our performance is so that, again, we can hold ourselves accountable.

In terms of the investments you've made, what percentage went against those taste elevation categories that have the highest future growth prospects versus shoring up the foundation of the formerly known as North American grocery portion?

You have to do both. So there's an element of where, you know, if we've underinvested in certain brands and certain categories and we've got some leaky buckets, you know, think about, you know, an Oscar Mayer, for example, we, you know, we need to make some investments in packaging to improve our Oscar Mayer performance. We know that. And so we will do those things. But the highest returns we're going to see and where we're really going to push forward is in some of our really iconic brands, taste elevation brands. And so, Heinz, Philadelphia, clearly areas where we can invest. You know, you saw us invest in Power Mac, our new Kraft mac and cheese, which, you know, when I came, it was already developed. But, you know, a comfort food like Kraft mac and cheese with high protein and high fiber is, you know, a pretty compelling offering, I think, for consumers. And retailers certainly saw it that way. And retailers got even more behind it when we upped our investment against it. So you have to have a balance. You have to do both. But as we charge forward, we'll want to have a maintenance level of investment around what we call hold and a winning level of investment against our taste elevation where we feel like we really have a right to win. And we've got brands that are very responsive.

Yeah. And as you talked about, it's a multifaceted. You've got more marketing, more investment in the innovation pipeline to market around, More commercial abilities, some investment in value. Which of those buckets, and maybe there's more, you know, do you think is the most important for the company to fix?

Yeah, I'd say, you know, really our innovation and our equity brand building are two elements that are really very important because, you know, when you look at our portfolio, one of the things that you see is our brand awareness is very high across the board. So think about brand saliency. People know our brands, but how that translates into household penetration is not always as strong as it needs to be. And there's two elements to really drive that household penetration higher when you have the type of saliency that we have. And that's through brand equity investment and innovation and getting both of those elements right. And so you've seen a lot of what we've done. And I've talked a lot about this, you know, a great example is what we've done with Capri Sun. It's a brand that is got very high saliency. But you know, you saw consumers, you know, which are basically young children drop out at about age 12, because we weren't innovating around what it would take to keep a 12 year old turning 13 in the category. Now, it turns out it's a pretty simple innovation. It's called the plastic resealable bottle. And so I teased the team about that, but it was really smart because they took a real consumer insight. Okay, when consumers, in this case, young children age from 12, you know, 10, 11, 12 to 13, 14, 15, it's no longer cool to have that little pouch that they had on the soccer fields when they were young, but they love the brand. And so coming out with a plastic bottle was a way to actually age with the cohort and it's proved to be very successful. Oh, and by the way, it opened up 25,000 or so additional And so a really terrific thing. And now we're just launching Capri Sun in the plastic bottle with electrolytes. Again, a hydration for, you know, the mom, dad who's shopping for their child and doesn't want perhaps all the sugar of a sports drink, but they want, you know, something that they trust and it's got electrolytes. So there's a lot of examples where, you know, we've got the brand, we've got the saliency, but we haven't had the right level of innovation and brand equity investment behind it. And the $600 million in getting to 5.5% and 1% of R&D really helps us accomplish some of those things.

I'm sure there are a lot of people in the room who are listening to this and say, okay, this makes sense, but the U.S. food industry is, you know, is no growth, right? The brands have tried making investments, and we just haven't seen companies be able to sustainably bend the trend, health and wellness, GLP-1, all the things that we've talked about for a long time. Why, why do you think?

So I think a couple of things. Andre reminded me that if you just look at the categories that we play in in the United States, you know, the growth standing still holding share would be 1.7% or so. Okay, so maybe not the most exciting thing in the world, but you know, it's growth. It's positive. And so how do we perform better within that? And that's all the things that I've just been talking about. And I think a lot of times, not everybody, but there's there's an element at a high level where the center of I would advance the idea that there's going to be winners and losers for sure, and there's going to be differentiation between those center of store and between, you know, companies like ours that make groceries writ large, and there has to be. And we will be and aim to be one of those that stands out among the top performers within that category. So what does that mean? It means north of 1.7% growth, which could be, you know, if you double that at 3.4%, That's kind of the algorithm that existed in the past that can be quite exciting when you manage your middle line very well and you get high single-digit operating income returns, and that translates into double-digit total shareholder returns for businesses like ours. And so I think that, you know, that may not be NVIDIA, but it can be very exciting, and it can be very appropriate for an investor to think about companies like ours and center of store, don't look at everybody with the same brush and think about who's going to be, which companies have the potential to win within that. And I think our portfolio sets itself up very, very well to be one of those winners because we've got iconic brands that have been underinvested. And as we get the investment levels right, as we get the execution right, as we get the organization really rallied around a top-line agenda, I think it's going to be exciting what we can accomplish.

One element, not the element that you've highlighted as most important, but one element is fixing value equations in pockets of the portfolio. And maybe you can both weigh on in this one. We've seen other companies, food and otherwise, make those value investments, see some volume response, but not necessarily see it translate into sustainable share or even a positive organic growth calculation. How have you approached that? What are your objectives in making these value interventions where you are, and how do you guard against just, you know? Promotion to stimulate some volume, but not really getting the positive, you know, full ROI.

Well, I'll start, and maybe Andre can weigh in. I think... And I don't want to comment on what others have done, but we're taking a much more surgical approach to when we think about pricing. And we think about it from the consumer standpoint, of course, and we think about affordability. And so, you know, we analyzed where are our gaps relative to competition, where are our gaps relative to private label, and where are our opening price points? And where do we have an opportunity to present to the consumer a more compelling value proposition and value writ large, not just price? And so I think if you just look at price, it's going to be more difficult. And all the things I just talked about in terms of innovation and marketing and consumer communications, getting the whole bundle for the consumer exactly right, but making sure that we put a real focus on affordability at the same time, I think is really important because there's no denying what's happened the last four or five years has been unprecedented. I mean, we had COVID, obviously. We had supply chain shocks. We had inflation the likes of none of us in this room have ever lived through. You have to go back generations to see that. And so you have all those things which has put the consumer under pressure, but the consumer still responds to brands that they love when they're presented with ideas that are value accretive to them. And so we've looked at price as an element of that, but only an element. And I think that's the important differentiator. Okay.

Andre, anything to add?

I think Steve Kovar, the key points here is surgical investment. And again, it's two-thirds of our 600 million is going against sustainable long-term initiatives, like it's marketing R&D, so we can innovate better, we can show our brands out there, continue to evolve the attributes in the product, and invest a lot in strong marketing salespeople that can execute well. Good.

Steve, you mentioned some of the retailer, not even acceptance, sort of excitement around the plant. Can you talk about, you know, how you're positioning? The company to work with retailers, you know, I guess maybe the level of retailer engagement and what you're trying to do, and just how you're positioning yourself to be more integrated with what seemed to be increasingly powerful retailers, you know, where we're seeing, you know, consolidation, I'm thinking the US but you know, so just a level of as you're making Making all these changes, you know. We've talked about what you're doing. We talked about what the consumer is looking for, but in between, you have a retailer who's a really important partner. So how are you positioning to maximize that partnership?

Yeah, I think the reception from the retailers around our paused transaction and our reinvestment, I don't think I know it has been extremely positive. I've gone and visited them, and I've talked to them. And, you know, as big as some retailers have become, as important as they've become, as consolidated as they've become, we're still very important to them. You know, we're in most aisles of their stores. We're in their omni-channel world. We're doing everything that we can to be a leader and a good participant in good category dynamics. And I think to the extent when when retailers really believe that and and understand that your commitment is to growing faster than the rest of their box and therefore being a tailwind to them and not a headwind is very well received. And that's what we've tried to do is build plans with this incremental $600 million that really speak to the consumer through the retailer. Right. And so that's been very well received, because if we're not growing, then we're a headwind and we're too We're too big to be a headwind, and retailers don't want us to be a headwind. They want us to be a tailwind, and so it's finding that overlap with retailers, with great consumer plans, and when you find that overlap, strategic overlap, and they understand that your absolute objective is to be good stewards of the category and grow your brands within a very healthy category, it leads to very good conversations and very iterative conversations where, you know, you have to be willing to Listen, you have to be willing to take the pushback, you have to be willing to understand what their needs are. But I have found the retailer dynamic to be extremely positive, but especially coming out of the reset, because they, you know, it's in their best interest to have a healthy Kraft Heinz. Yeah, okay.

Can we talk about the balance between You know, more bets, you know, more bets, more investment across more categories and more brands versus, you know, bigger bets. I think you have, you're doing a little bit of both, but I think you've talked about emphasizing fewer, bigger bets. Where are those bigger bets being placed? And how do you, what kind of discipline and information have you built around your internal processes to make sure that where you're, where you're making those, those investments is the right place?

And so we are trying to do bigger and fewer, particularly as it pertains to innovation, because the focus of the organization and the resources of the organization can be best deployed when you really have that focus. And so think about the big brands like Heinz in Philadelphia and Kraft, Mac and Cheese. You're going to continue to see some big investments around that. And some of the platform innovations that we're doing. So think Heinz Simply and Heinz Zero. You know, those are You know, platforms with a lot of potential. This simply speaks to consumers who are looking for clean label, who are looking for, you know, health and wellness, who are looking for nutrition. So things around nutrition and convenience and our big brands are areas where we'll see some real focus against. Now, having said that, we can do both, right? We can't neglect when we have such a large portfolio. And I often think, you know, if a small family owned the Grey Poupon brand, would it be... Better performing? I think the answer is probably yes. So how do we do both of those things at the same time and take brands like Lee and Perrins, like Grey Poupon, that are absolute gems and are small in our portfolio, and give them the right level of focus? And that's part of the human resource investment that we're making in putting really talented people against that, giving them the right level of resource and letting them go run and win. It doesn't distract the rest of the organization, and you can do both. So from a magnitude, you're going to see the big platforms against the big brands with innovation, but you're also going to see us look at some of these really, you know, unpolished gems in our portfolio that perhaps haven't had the right level of execution get executed against, and I think they can grow a lot, you know, a lot better than they have been in the past. Okay.

How far out are you? Is your, how far out are you planning, right? I mean, or how far out is the innovation pipeline being built, the programs being built? I think we're all looking at, you know, money being spent today and looking for the early green shoots and signs of progress, but, you know, in your own, internally, how much work is being done to, you know, tactically put in place 26 plans versus building out a pipeline for 27 beyond?

So we're just starting our three-year plan right now, and so the minimum for the innovation pipeline will be the three years that we're looking at right now, but realistically, it's double that because a lot of the food scientists work and the real breakthroughs, you're looking at projects that may not come to fruition for five or six years, and so we're looking at really a six-year horizon around realistically what should we be working on that will take that amount of time, but with the real pressure against the three years. We have a three-year horizon as we build our three-year plan. And then in the fall, you get to really finalize what a 2027 plan looks like.

When is the three-year plan? Did the call come to fruition in concert with the end of this year, or when is the—you're building it, when does it finish?

It really finishes before the end of the year because it transitions very quickly. The first year of your three-year plan better be your 2027 budget. That's the way I've always focused on things. I know Andre thinks the same way. And a great three-year plan always gets, in my experience, you build it every year because you're just tacking on another year. And when you really get humming, the first year of your budget is the last year that you're working on.

If we zoom out a bit, Andre, in the past several years when we've been on this stage, we've talked a lot about technology and capability building inside the company. And yet, now we're back to kind of doubling down and investing. So, you know, is part of the capability gap that is being filled? Is it technology or is the organization actually in a good spot from a technology and consumer insights? You know, foundation, and it's really the people and the marketing to be able to utilize that technology better. Where are we? Because it seems a little bit disconnected from all of the forward thinking of the past relative to kind of a reset and reinvestment phase now.

Technology continues to be an important pillar, and technology is evolving so fast, we need to evolve together with it. As we have mentioned several times, we invested a few years ago in our revenue management structure. We feel very good about what we have. In the U.S. alone, we have about 50 people fully dedicated to it. So, we do have very good techniques on how to re-identify the best type of tactics. We made good progress as we have been reporting periodically. We improved our promo ROI to any basis points from 21 to 24. We moved it to a position of having net ROI positive, the promotions. Last year was not a good year, as we have indicated as well. We believe it has a lot to do with sales execution. So we feel very good that with the investments we are doing headcount on sales, that will help tremendously. We have already got the lessons from last year and already put some of those in place this year. So even year to date, we saw improvement versus of your last year. Still more to come, but I think we're moving in the right direction. But the technology continues to be a main pillar, and we think we need to continue involved with that. We feel very good. We have a A sizeable organization that's all they do is AI. And those this team is being is deployed by different functions. So there is a lot of effort right now starting from the top for us to have the organization embracing that faster and faster across the board.

Okay, Steve, when you came in the organization, did you where did you find maybe the organization was surprisingly ahead versus, you know, versus things that you needed to accelerate from a from a from a capability standpoint?

One of the really positive surprises was our level of awareness, consumer insights and technology, as Andre just mentioned. And so there's a good capability. We were not suffering from a lack of understanding what was happening, and so that was a very positive thing. If we had to rebuild our consumer insights, it would take a lot longer. So the consumer insights, the team, the capability, the technology, I think was really, I was impressed by. I was really impressed by.

I want to hit on a couple of things before we run out of time. From a financial perspective, Andre, there's a lot of focus on snap reductions in the US, and you've called it out as a real near-term headwind for you. I guess, how are you sizing that impact as you see it today, and then what are you doing more tactically to mitigate some of those impacts where you

Yeah, so as we have said in earnings, we anticipate 100 bps headwind linkage to snap reductions. And we are seeing some of that coming to fruition now, if you look at the latest eight weeks or so, it's a lot affecting the sector. The best mechanism defense is productivity, to be honest, because we continue to go through inflation, right? So, despite everything, this year we are anticipating about 4% of inflation, which is twice the normal rate that we have seen in the past. And I think because of the good work we have been doing productivity, and now we're going for the fourth consecutive year of being delivering 4% of COGS, that has helped us a lot to alleviate, avoiding having to take as much price as we'll normally do. So this year, we're only pricing 20% of the inflation. I think in productivity, we continue to be a critical pillar for us moving forward as far as to protect the consumer in this moment. Now, with that being said, as Steve mentioned, like a portion of our 600 million dollars is going against these opening price points, very surgically, so in about, there are very specific categories, like salad dressing, pasta sauce, etc., that we are making sure that we have that particular SKU that we are offering to the low-end consumer to protect them in this moment.

What about from a cost perspective, in the background, you know, we've talked a lot about this conference, and in general, just about the rising cost backdrop. As you're looking to invest 600 million or more, costs are rising in the backdrop. What's your level of confidence that you can withstand that rising inflationary backdrop in 26, and also your level of confidence that that doesn't become an increasing headwind that, you know, You know, it requires a step down into 27.

So, look, as you said in earnings, we feel we are hedged for the short term, so I think our near term is very well protected. And the productivity will play a very important role as well. If it is inflation that is currently expected to hit in 2027 as hedges roll off, productivity will be, again, the main mechanism defense. And if you get through a situation where the whole industry needs to rise because of the magnitude of the inflation, we will do so, but again, in a smart way and trying to minimize this. So I think there is a lot of effort on our side to do the best we can with productivity. We are currently working on how we can further step up from where we are today so we can protect the consumer in this moment.

Yeah, because you've said 26 is a margin floor, and nothing at this point deters you from that outlook, correct? I guess from a balance sheet perspective, Andre, you've got some... Maturity is coming up, you've taken some steps there. I guess, just how are you thinking about the capital structure and capital allocation priorities from here?

I feel very good about the cash flow generation of this business. Last year we delivered way more than 100% of cash conversion this year, where we're on track to deliver that against. And I think the excess cash that we have been generating and the strong balance sheet has allowed us to step up $600 million in investment And don't compromise any of our capital allocation priorities. In fact, it's preserving the dividend that we have, which is very attractive. Maintaining investment grades, those are table stakes for us, and they're very important. We have excess cash still generated, even with the $600 million, that we still have flexibility. If you want to do so, to step up more investment, we can do that. So we're in a very good position. Our dividend is very well protected at this moment. And as you alluded to, we are paying down $1.9 billion of debt now in this quarter. We are actively now looking at the 2027 because I have another big maturity coming through, and we are strongly considering anticipating paying down debt because I have a good position of cash on hand right now. We just issued a euro bond. That allowed us to get out of some expensive debt that we had in our debt, that alone was very successful, we were very oversubscribed, we were able to reduce interest expenses, $300 million over 10 years, it was very successful, so I think, again, we feel very good about the cash flow generation of this business, we feel very good about the cash flow discipline, balance sheet is in order, dividend is well protected, so I think we're in a good position.

Okay, we're almost out of time. I guess, Steve, as we wrap up, if there's one thing that investors should remember and hold Kraft Heinz accountable for to judge success over the next year, what would it be?

It'd be organic, top-line growth, momentum building. Based on our share performance. And so we've been very specific about that. And this is not a cost savings story anymore. This is a collection of phenomenal brands that have been underinvested, that are now going to be appropriately invested in, and that will, you know, win share, win consumers, partner with retailers to create something that, you know, I think is going to be differentiated from many of our peers.

Okay. With that, we're out of time. We'll end it there. We'll look forward to hearing and tracking success over the next coming quarters, and we'll see you back here next year. Thanks so much. Thank you, Steve.