Hello, and thank you for standing by, and welcome to today's Coca-Cola Europacific Partners Q3 2026 trading update conference call. I must advise you this conference call is being recorded today. I would now like to hand the conference over to Vice President of Investor Relations and Corporate Strategy, Sarah Willett. Please go ahead.
Yes. Hi, everybody. I am here with Damian Gammell, our CEO, and our CFO, Ed Walker. First, a reminder of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in today's release, as well as the detailed cautionary statements found in the reports filed in the U.K., U.S., Dutch, and Spanish authorities. Copy of this information is available on our website at www.cocacolaep.com. Prepared remarks will be made by Damian.
We will then turn the call over to your questions. Unless otherwise stated, metrics presented today will be on a comparable and FX neutral basis throughout. Volume movements for the year- to- date adjust for the impact of six more consumption days during Q1 when compared to the same period last year. Following the call, a full transcript will be made available as soon as possible on our website. I will now turn the call over to our CEO, Damian.
Thank you, Sarah, and many thanks to everyone joining us today. Before looking at our Q3 in more detail, I did want to take a moment just to reflect on our year- to- date. Our performance to date has been strong, with balanced revenue delivery supported by good volume growth and solid revenue per case. The breadth and quality of that delivery is particularly pleasing, with growth in both Europe and APS, in both home and away from home, and with our strongest brand performances aligned to where we see the consumer continuing to move.
At a macro level, while the cost environment remains inflationary, we have acted early and decisively through hedging, productivity, discretionary cost control, and disciplined pricing, as you would expect. That gives us the flexibility to absorb incremental pressure while continuing to invest behind growth for the future. Although we have seen an increase in the cost of doing business, particularly during H2, we remain firmly on track with no change to our full-year guidance. The strength of our performance and consistent delivery of our midterm objectives is grounded in the execution of our focused strategy, which revolves around our core strategic priorities.
We are broadening our total beverage portfolio, investing behind faster-growing categories like zeros, hydration, and energy, driving innovation across both established and emerging brands. We bring those brands to life in market with great execution through eye-catching shelf presentation, many points of interruption, more coolers than ever before, or major activations like the recent FIFA World Cup or Australian Rugby League Finals. This enables us to continue to differentiate ourselves in the marketplace.
The enhancements we are making in revenue and margin growth management, investment in commercial capabilities, and productivity improvements ensure we will remain competitive. We are creating long-term and scalable opportunities to accelerate growth through our investments in the Philippines and Indonesia, and the development of tech and AI is helping us to generate new growth opportunities across our business, improving decision-making and increasing our manufacturing efficiency. Now to touch on NA RTD. The category continues to grow in both volume and value, and we remain the number one retail value creator for our customers across all our major markets.
We have grown value share in Europe this year, and we are also seeing encouraging volume share gains in GB, sparkling led by light colas. We also continue to gain traction in away from home with some great customer wins, including over 300 new points of sale with SSP, the second-largest operator in train stations and airports in France, Domino's in Australia, and the transition to Marriott International representing over 600 hotels in our markets is now well underway. The shape of the NA RTD category is developing as consumer preferences evolve, with growing demand for zero sugar, functional beverages that serve a specific need, whether that is energy and caffeine, hydration and replenishment, or protein.
Our portfolio is well placed to capture these trends, with innovation playing a key role in our growth this year, with many more exciting developments to come as we look into next year and beyond. With The Coca-Cola Company and Monster, we continue to have access to a great pipeline of global innovation. Now turning specifically to our Q3. Revenue grew 5.8% on an FX neutral basis, with volumes up 3.6%. Revenue growth was well balanced, with the increase in volume complemented by improved revenue per unit case, reflecting promotional optimization, positive brand and pack mix, and headline pricing.
While some consumers remain value-conscious, we have not seen a material increase in that as a driver of shopping behavior. As ever, we remain focused on balancing affordability and premiumization across our broad pack offering to drive sustainable profitable growth. Our RMGM capabilities play a vital role in this context, enabling us to make increasingly segmented choices by market, customer, brand, and pack, meaning we remain relevant on price and value while supporting mix, creating value for our customers, and driving unique and fun experiences in-store for our consumers.
They continue to respond to innovation, exciting activations, and great execution, all of which are reflected in our strong volumes, which also benefited from favorable weather through the quarter in Europe. We have seen strong brand performances across our portfolio. Coke trademark volumes grew by 2% in the quarter, driven by Coke Zero Sugar, up 10% this year, and the improvement we have seen in Diet Coke, up 5% this year in GB, its major market. Performance also reflects the success of Coke Zero Caffeine and the growing appeal of our 500 ml super cans, which are driving incremental volume, particularly with younger consumers.
So that format has now been extended to include Coke Cherry, Dr Pepper, Fanta, and Sprite. Sprite continued its strong performance, with growth in Europe supported by Sprite Zero Chill, and in APS by the success of Nipis Mint in Indonesia, with Sprite packaging across our markets now reflecting the great, exciting global tie-up with the NBA. Our sports portfolio has delivered double-digit volume growth across Powerade, Aquarius, and BodyArmor, building on and beyond the World Cup. New pack formats and Powerade flavors are supporting performance, including a new cherry variant in GB and a new Stars range in Australia.
This is designed to recruit the next generation of drinkers by making the brand more relevant and exciting. There has been no letup in the growth of energy, up 17% in the quarter, with Monster growing by more than 20% in many of our key markets. This has been supported by innovation such as Viking Berry, Ultra Vice Guava, but also by the core with Ultra White in the market for nearly a decade, delivering more than both of them combined. This balance between innovation and existing SKUs with higher distribution and more coolers is supporting sustainable double-digit growth for the brand.
Across the portfolio, the demand for zero sugar continues to grow. We are seeing double-digit growth, Coke Zero, Coke Zero Caffeine, Sprite Zero, and around 3/4 of total energy growth has now been driven by Monster Ultra. Looking forward, we will broaden our participation across these faster-growing categories while continuing to invest in the core, something we will come back to in February as part of our full-year results. Turning briefly now to performance in our markets.
We had a strong start to the quarter in July, as we highlighted in our half-one results, supported by the later stages of the World Cup and favorable summer weather in Europe, which continued through much of the quarter. Europe had a very positive quarter, with volumes up 2.3%. Revenue was up 5.2%, with revenue per unit case growth of 2.9%, higher than the previous quarter, reflecting the phasing of promotional spend being half-one weighted and a lower half-two comparative. We saw good growth across both channels, supported by fantastic in-market execution, innovation, and customer wins, with standout performances in Iberia and GB, building on the record performance last year.
Germany had a strong start to the quarter, with growth through July and August similar to the rest of our European markets. This was offset by the impact of temporary customer disruption in September as we negotiated new commercial terms, which are now in place, with trading now more or less in line with expectations. Volumes in APS increased by 6.4%, with good growth both in Australia Pacific and in Southeast Asia.
We grew revenue in APS by 7.8%, with 7.2% growth in Australia and the Pacific Islands, significantly ahead of the previous quarter, with the headwind of the Suntory alcohol exit in Australia having been fully annualized during half one. In the Philippines, solid momentum continued, with volume growth in line with our midterm expectations, driven by Coke Original Taste and strong double-digit growth in Coke Zero, supported by our full-on flavor campaign. We have also seen continued double-digit growth in water, driven by Wilkins Pure. In Indonesia, we are encouraged by the shape of what we see in the NARTD category.
Traditional tea is under pressure. However, sparkling and sports drinks are growing ahead of the category. I am particularly pleased by what we have seen in our business in Indonesia, with strong double-digit volume growth during the quarter. It is a combination of successful innovation, more affordable smaller packs, and increased distribution, supported by our route-to-market changes that are starting to deliver a real positive outlook as we look towards next year and beyond. In summary, and back to where I started, we have had a great year so far and have continued to demonstrate the resilience of our business and consistency of delivery.
Clearly, on the cost side, the uncertain geopolitical environment, including the situation in the Middle East, has led to more inflationary backdrop and higher operating costs for our business, both in commodities and in OpEx. A combination of hedging, control of our discretionary spend, delivery of productivity savings, and disciplined management of pricing and promotions has provided the flexibility to absorb additional costs while maintaining record levels of investment behind growth, which stands us in good stead as we look into 2027 and beyond.
We are also pleased to be declaring a second-half dividend of EUR 1.42 per share, which together with our first-half dividend of EUR 0.82, maintains an annualized payout ratio of approximately 50%. The current EUR 1 billion share buyback will conclude this year. Looking ahead, Q4 started well, and we have strong commercial plans in place as we look towards an important final couple of months with Christmas and summer trading in Australia and New Zealand to come. As a reminder, we have six fewer consumption days in Q4.
That is reflected in our guidance for the full year, which, as I mentioned earlier, remains unchanged. Standing back, there is much to feel pleased about. We delivered a great Q3 with strong revenue and volume growth, balanced across markets and channels. We are broadening our portfolio, which is well aligned with the evolving consumer preferences. We are winning through execution, growing value for customers, and creating excitement for our consumers. Our RMGM capabilities and consistent pipeline of productivity savings means we are competitive and resilient despite increasing inflation.
We are unlocking new growth opportunities through investments in technology and the ongoing development of our markets in Southeast Asia. We therefore remain confident that we have the right strategy, done sustainably, to continue to create long-term sustainable shareholder value. Thank you for your time today. Ed and I will now be very happy to take your questions, and I will pass the call back over to you, operator. Thank you.
Thank you. To ask a question, you will need to press star, one, and one on your telephone and wait for your name to be announced. To withdraw your question, please press star, one, and one again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Sanjeet Aujla from UBS. Please go ahead. Your line is open.
Hi, Damian. I would like to dig into the Germany retailer dispute. It has been a while since we have seen any material disruption through price increases. Can you just elaborate a little bit more on how that played out, and just to confirm, is that now fully resolved in Q4? Thanks.
Yeah. Thanks, Sanjeet. Yeah, it was very much a one-month dynamic in September, so it has been resolved. As we go through some of those negotiations, as you would expect, promotional intensity, et c, can drop off, and that is really what we saw in Germany. Clearly, as we have looked at our cost situation and inflation, we felt that ongoing pricing is a key part of our strategy. The team worked to resolve it as quickly and as amicably as possible with our customers, but we did have some disruption.
To be fair to Germany, it kind of takes the shine off what was a really, really strong start to the quarter. So our July and August volumes in Germany were very much in line with what you have seen across the other business units in Europe. The good news for us is back to normal trading in October, pricing in place, not just for the end of this year, but clearly that flows into 2027, which is important for us as we get ready for another great year at CCEP.
Just a quick follow-up on that revenue per case acceleration in Q3 we saw. Given the visibility you have on COGS now into 2027, does that need to further build from current levels, or is that at the right place in order to absorb a lot of the headwinds you are going to see next year?
Hi, Sanjeet. Ed here. As we look at the cost environment, yes, absolutely, there is more headwinds for next year than we have seen in 2026, but nowhere near the levels that we saw back in 2022 or 2023. So we think we are well-placed to manage those. When it comes to those cost headwinds, the first thing we look at is what we can do within the P&L and manage ourselves, whether that is through the transformation program, stronger management of discretionary costs, leveraging the mix, good RMGM in terms of how we optimize promo, and then, of course, finally, pricing.
So, we think we have had a good track record of doing that and being very considered and looking in a very disciplined way at pricing, and we will continue to do that. But we feel confident that we will be able to manage the cost headwinds for 2027.
Great. Thank you.
Thank you. We will now move on to our next question, and that comes from the line of Edward Mundy from Jefferies. Please go ahead. Your line is open.
Afternoon, Damian and Ed. Damian, you finished your pre-prepared comments talking about, on the one hand, exciting consumers, on the other hand, growing value for your key customers, and finally, creating value for your shareholders. What do you think has changed in your capabilities over the last couple of years that makes that flywheel stronger today, and what gives you confidence in growing in line with that sort of medium-term framework into next year, is my first question.
Secondly, I would love to talk a little bit more about Indonesia. I think you mentioned you are particularly pleased with the step up there. Could you perhaps go into a bit more detail as to what has changed in Indonesia, what is really working, and as you think about the sustainability of that into next year as well?
Thanks, Ed. There is a lot in your first question, so I will try and do justice to it in a short response. But clearly, we have been working on a lot of areas across our business over that period. I mean, I think there are a couple of things that give me real confidence as I look to the future. Certainly, the portfolio of brands, I mentioned in my prepared comments, but having access to the pipeline from The Coca-Cola Company on a global level and Monster, you just see a lot of great innovation coming in the category that we have access to, and that gives me a lot of confidence.
Some of that is kind of close to our core, and you can see it in our numbers, particularly the growth of Coke Zero, and some of our brands that I have talked to before that we need to do better on, like Diet Coke. So that gives me a lot of confidence. You add to that innovation across NARTD, the energy category, BodyArmor, Powerade. I know we can do a better job on tea in a number of our markets. So, from a portfolio perspective, that excites me. Clearly, that is also being backed up by ongoing investments.
So, I think what you see in our numbers over many years, whether it is on the CapEx side or on the OpEx side, we continue to invest for growth. That gives me confidence that, whether it's number of coolers in the market, whether it's the investment behind shopper, that we continue to grow the category and grow our share in the category, and that's really important. Then, obviously, capabilities, particularly around tech, that's exciting because you start to see a couple of dynamics at play. You see the growth opportunity from technology, which is my primary focus, if I'm being honest.
I get very excited about looking at how it can stimulate consumer engagement, shopper engagement, and growth, whether that's RMGM capabilities. But clearly, also, we're starting to see it coming through on the productivity side of the business, and whether that's manufacturing efficiency, planning, building out our shared services function, and also removing work. From a growth perspective, that plays into two elements.
One is growth, and then the second one is funding growth. Then, while we talked a little bit to our challenges in Germany, I think if you look over the broader context, we continue to create a huge amount of value for our customers. That gives me a lot of confidence, because when you look at the profitability and cash generation that our portfolio brings to our customers, I think that makes it very sustainable. Then, as you've kind of talked to before, I think the category's in a great place. I think NARTD as a category generally is playing into consumer trends that are not just for this year or next year, but are very sustainable over the mid and long term.
All of that gives me a lot of confidence. Not without challenges, so we all know that, but underlying, I think it's a great place to be. On Indonesia specifically, some of the same themes actually play out, right? We have been investing in Indonesia on a continued basis, whether that's through restructuring our supply chain or building a new route to market. That's definitely having an impact on our top-line growth now, so we're happy to see that play out. We've also grown portfolio, not just in sparkling with zeros, but also across sports, and Nutriboost is doing really well.
So, that portfolio play is part of what's driving Indonesia. And clearly, we see that as a great long-term opportunity. But it's great to see it delivering in the quarter. It's having a good Q4, and then we're into Ramadan early next year. We've got a couple of very exciting quarters ahead of us in Indonesia, and I think it's particularly pleasing for our team on the ground to see the results of all that endeavor pay out. And it is sustainable, which is most important. For me, I'm excited about Indonesia. Thanks, Ed.
Great. Thank you.
Thank you. Our next question comes from the line of Matthew Ford from BNP Paribas. Please go ahead. Your line is open.
Hi, Damian and Ed. Thanks for the question. The first one is just on the Philippines, actually. Obviously, very, very strong performance from Indonesia. I think the Philippines, you mentioned volumes up mid-single digit. I think from last year, you had the typhoon impact, a bit of flooding, so the comp was relatively soft in the quarter. I just wanted to get your sense of how things are on the ground there. Clearly, the trends have been solid despite potential macro headwinds and impacts on the consumer.
Any sense of whether that's filtering through to the consumer level, and what your expectation, I suppose, is for that market into Q4 and into next year? The second one, I suppose, a bit of a technical one, but just on some one-off tax changes coming up late in 2027, 2028. I'm thinking here German sugar tax potentially coming in late next year, U.K. Deposit Return Scheme in Q4 next year, and obviously the potential for something in the Philippines. Just be interested to get your sense of those. Obviously, some of those are more concrete than others, but how you're thinking about those ahead of time, and what impact we may see there. Thank you.
Thanks, Matt. Philippines had a really good quarter. I mean, we also passed on some pricing to cover some of the COGS inflation we have seen. When I look at it in the round, I feel particularly pleased that we could deliver that growth in the quarter on the back of a softer comp, which you are absolutely right. I do not see any change in the direction of our business there into Q4, trading well, and then into next year. We have been quite disciplined in managing margin and profitability and volume growth in the Philippines, and I think you saw that in the quarter. That will continue into Q4 and into next year. I think that is important because we are investing a lot back into that market.
I think that margin expansion along with good top-line growth is the right balance for that business, and that is what we saw in the quarter. To your comments on some of the trends that are coming, and I think, for sure, we are very much focused on them. I think the sugar tax timing in Germany is still open, but, I mean, that is a playbook that we are well used to, both in terms of reformulation, pack price management, and we are running a number of scenarios on how we are going to deal with that into the end of next year, if that is when it happens. On DRS in GB, again, it is one of the last markets of scale to move to DRS.
It has been a long time coming, as we know, for lots of reasons. I think as an industry and with our customers, really well set up for that, and I think some great learnings out of our recent DRS execution in Portugal. Clearly, Ireland has had a successful implementation of DRS, so we have been taking the opportunity to learn in GB from that. That is ready to go. Philippines is always ongoing conversations about some potential taxes or expansion of new taxes.
Clearly, we will probably get better clarity on that as we come into Q1 next year, and we will probably be able to talk to you a bit more in February. Overall, very clear line of sight in those challenges. Some clear playbook, certainly on the first two that we can deploy. We will probably talk a little bit more to how we see that on an annualized basis when we get into our guidance for next year. Again, well-known, well-managed previously, and I expect the same going forward. Thanks, Matt.
Great. Thank you.
Thank you. We'll now move on to our next question. Our next question comes from the line of Chris Carey from Wells Fargo Securities. Please go ahead. Your line is open.
Hi, everybody. Thank you so much for the question. Regarding the comment just around the cost inflation outlook being manageable going into 2027, do you think that you still have the ability to run the same playbook in the current consumer backdrop? Said another way, is pricing and RGM still as tangible for you as an offset to incremental inflation going into next year? Or is this the kind of environment where you might need to disproportionately lean on productivity, given the consumer backdrop?
Certainly, we haven't seen that on a year-to-date basis, given the strong delivery, but I just wonder how you're assessing the consumer and your toolkit going into next year. I have a specific question just around energy. It does look like volumes accelerated, or at least are implied to have accelerated in Q3 relative to Q2, despite tougher compares a year ago. Can you just talk about what's going on with the category to sustain this quite exceptional growth, and how you see duration going into next year? Thanks so much.
Yeah. Thanks, Chris. Maybe I will deal with the energy, and then myself and Ed will talk to the first part of your question. Energy is really a great example of the broader playbook. I think what you are seeing is very consumer-centric propositions landing in the market, whether it is sugar-free, flavor variation. So, a lot of excitement, and I think really playing into that expanding consumer need state of energy or uplifts, probably across broader parts of the day. So, I think we are seeing the energy category continue to expand into broader usage occasions, so probably much more aligned to what you have probably seen in the U.S. over many years.
We see that evolving in Europe. On a per capita level, we have still got a way to go in a lot of our markets. And clearly, from a share perspective, our average energy share is around 25% on average. So, clearly, we have got an opportunity to continue to grow share in the category as well. So, all of those dynamics are leading to the growth you are seeing, and that is very sustainable into next year and beyond. So, I had the opportunity to look at our two year innovation pipeline in energy, and it is exciting looking forward as it has been looking back.
So, I do not see any change in the momentum, and it is a great category for us. So, really happy, and one we are expanding not just in Europe, but across our APS business as well. To your first question, we see the two remaining very robust into next year. I think we have got a good track record of balancing headline price, which we see as being necessary in terms of some of those cost inflations you talked about, but not to the degree that pushes our consumers or shoppers away from our portfolio. So, we are very conscious of managing, as I said in my comments, the affordability, the premiumization play.
I suppose what is helping going forward is probably more around that technology insight, so using more faster modeling tools to kind of get us answers quicker around elasticity and what happens at different price points, and that is super exciting going forward. But if you look at our business generally, I think we have got a number of tools that allow us to manage that in a sustainable way. We have got headline price, we have got mix, particularly packaging mix, we have got channel mix, so very balanced home and away from home mix.
And clearly now, more and more, we are building in geographic mix, so when you look at the growth rates that we are seeing across our APS business in Europe. So, all of that, I think, will sustain that balance going into 2027 and probably into 2028. We do not see some of those inflationary pressures coming off anytime soon, so we are definitely taking a multi-year view of our price mix. And maybe, Ed, you want to just touch on productivity and—
Yes. Chris, transformation will be an important part of the plan next year, but it is an important part of the plan every year, to be honest, and it is one of the reasons we are able to get such strong leverage from that revenue growth to the higher operating profit growth. So, that will continue next year, but I do not think there will be any extra leaning on it in terms of making the numbers work next year. It will be an important part of the plan, but it always is.
We have got some exciting programs in place, more work on the network in terms of optimization opportunities, accelerated use of shared services, and now starting to see more and more technology as an unlocker for that. That across all our territories, from Europe all the way through APS. So, important part of the plan, but no more important than any other year.
Yeah. I think just one comment. I think multi-year investments also payback, because what we are seeing is consumers responding really well to some of the great assets. We have just gone now Sprite NBA. Clearly, as we look into next year, we are very focused on having another great summer. So, what we also see is as you invest behind the consumer, you can sustain more of that pricing. I think that is critically important for us, not just for next year, but beyond. Thanks, Chris.
Thank you so much.
Thank you. We will now move on to our next question, and our next question comes from the line of Charlie Higgs from Rothschild & Co Redburn. Please go ahead. Your line is open.
Cool. Hi, Damian, Ed. Hope you are both well. My first question is on trademark Coca-Cola, where volumes are up a very nice 2% in the quarter. I was just wondering, did Coke Classic grow within that? Could you perhaps provide a bit more color on what parts of trademark Coke are really working? There is a lot going on with the 500 ml cans, you have got the Zero rebranding in a few markets, you have got Zero Zero going really nicely. Which parts of trademark Coke are working probably the best? My second is kind of the other side. Fanta volumes down 1.5% in the quarter. It has been a bit muted for a while now. How do you think about kickstarting Fanta again as we go into next year? Thank you.
Yeah. Thanks, Charlie. Lots to really like on our Coke trademark performance, and lots to continue to focus on as well. On really what is driving performance, I think you have called it out pretty well. Coke Zero continues in absolute terms to lead our growth. We have been particularly pleased with how Coke Zero Zero has landed, particularly outside of Iberia where we have had that product, but certainly the new black and gold packaging has been really well received by our customers and consumers. That is doing well. Very happy for those of us based in the U.K. to be able to talk about Diet Coke.
I think we raised that point before that we see that as being a growth brand for the future, not just in GB, but clearly it makes sense to start here, just given the size of that brand for us. Then obviously, we are moving that platform into other European markets, starting in the Nordics, as we get excited about Coke Light across more of our markets. In terms of small packs working, so 500 ml can, immediate consumption is holding up well across all of our Coke trademarks.
Where we continue to see consumers moving out of is clearly that large PET volume. From a Coke trademark perspective in Europe, that clearly we see ourselves growing revenue but not volume, really on the back of that large PET. But that has been with us now for a number of quarters, and we expect to continue to see growth across the other platforms. Within APS, obviously, Coke trademark grew volume, really led by the Philippines and our continued improvement in Indonesia. A lot to be excited for on Coke.
Turning to Fanta, we have more work to do in Fanta, Charlie. I mean, clearly it has been a brand that has done really well, but has slowed down in recent quarters. There are a couple of areas that we are working on. I think one is obviously just bringing more excitement through flavor innovation and pack innovation, so we are moving that into the 500 ml can. Clearly working with the Coke company on that brand. It is a huge category for us in terms of the size of flavors. So, more to come on Fanta as we move into next year, and that is part of our plans.
Thanks, Damian.
Thank you. Our next question comes from the line of Simon Hales from Citi. Please go ahead. Your line is open.
Afternoon, Damian and Ed. Can I just come back briefly on Germany, Damian? Are you able to quantify the pricing you were able to get through as part of your negotiations in the quarter? Secondly, just back on the broader cost environment. Obviously, clearly upward pressure through the P&L, both in COGS and in OpEx in H2. Obviously, I think COGS per case are running at about 2.5% in the second half of the year. Is that the 2.5%-3% run rate we should be thinking about for 2027, Ed?
Where are we on hedging on COGS? Are you able just to talk a little bit more about how those logistics and fuel costs are really impacting OpEx in H2, and remind us of your ability to be able to hedge some of those fuel-related costs or not? I'm not sure how you actually sort of play that through the P&L.
I'll be very quick, Simon. We don't talk to specific in-market pricing moves. Clearly, we feel that was important. I'd also emphasize it was with a couple of customers. Across most of the market in Germany, we had an unobstructed September. We don't give specific commentary on pricing for a variety of reasons, which I'm sure you're aware of. I'll pass to Ed on the comments on the COGS and OpEx.
Yeah. Hi, Simon. We're not guiding to 2027 now, as you would expect, and there's still a number of moving parts, I think, as we look forward to that. When you look at our cost of goods for H2, they're a bit higher than H1. There's two reasons there. One is that H1 had the benefit of the exit of the alcohol deal with Suntory, so that was keeping the cost of goods down, and actually our hedging program as well is always a bit more visible in the shorter term than the longer term, so we had more hedging benefit in H1 than in H2, which is why the H2 COGS are slightly above H1.
When we look forward to 2027, we aim to be up to 80% covered on hedgeable commodities by the time we close the year, and we're broadly on track to be doing that. I'd say we're very well covered in areas such as aluminum and sugar, as we sit here today. As you alluded to in your question, the more challenging area are things that are oil-related or fuel and energy costs. We're in reasonable shape on those that we can directly cover, so our own energy or direct fuel consumption. What's a little bit more challenging is the indirect.
We do cover that in some areas if there are explicit contracts with the supplier, but we can't cover as much of that volatility as perhaps we can on aluminum and sugar. We think in the main, that's all very manageable as we look forward. I think one thing that is always worth reminding ourselves is that commodities themselves represent about 25% of our total cost of goods, so we do have some natural inbuilt resilience, I think, to those movements within the overall delivery of the P&L.
Very helpful, Ed. Thank you.
Thank you. Our next question comes from the line of Andrea Pistacchi from Bank of America. Please go ahead. Your line is open.
Thank you. Yes. Hi, Damian and Ed. Just one from me. I would like to go back, please, to the accelerating revenue per case in Q3, particularly in Europe, where price mix was close to 3%. How much of the acceleration reflects maybe pack mix through the summer or promo phasing, which I think you referred to, versus more underlying pricing that is starting to come through as you act early on cost inflation in some markets and maybe specific channels? If you are able to share where you are in the pricing process today, how much of what you are planning for 2027 is already in place versus still to come, recognizing, of course, that it will be very different by market?
On the Q3 revenue per case, we are very pleased with that. I would say it is fairly balanced between mix and rate, slightly more rate than mix, but it was great to see through the quarter mix contributing so much to that revenue per case line. It really comes from brand mix, as Damian mentioned earlier, and energy is always a major component of that, but also pack mix. As we see throughout the portfolio, but particularly on the Coke portfolio itself, more small packs and premiumization opportunities really helping drive that mix.
Then the consumers naturally moving really away from large PET into cans also helps that mix. So we see no reason why that will not continue, and that is obviously a great help to us as we manage the cost environment without putting all that pressure onto pricing. As you suggested in your question, I think pricing is very different by market, and it is always a dynamic process in itself. So we always look at the circumstances in each individual market, what is the right type of a pricing approach for the consumer, the customer, and also what do we need for our shareholders ultimately.
That pricing also varies in terms of when it occurs during the year. So as and when the pricing decisions come up, we look at those and decide in that particular market, what is the right approach given those circumstances. As Damian mentioned earlier, making sure that we are disciplined and consider carefully the impacts on affordability.
Yeah, and I think just to add Ed's comment, I mean, we have also moved some of our promotional floors during the quarter, so getting smarter around promo investment, using technology also into next year to understand even better what promos really drive incremental household penetration or recruitment. That obviously back to my comments around technology and the use of AI at CCEP, that is a key value driver for us. So what you will see also is slightly changed promo floors as we come through Q3, Q4, and into next year, and that plays into that rate mix commentary that Ed shared with you.
Got it. Thank you.
I think that will continue is, it will continue to be very segmented, so it is not going to be one price change everywhere across all markets. We will look at each market independently, and even within that, what is the right thing on individual packs and within individual customers.
Thank you.
Thank you. Our next question comes from the line of Richard Withagen from Kepler Cheuvreux. Please go ahead. Your line is open.
Yeah, thanks. Good afternoon, Damian, Ed, and Sarah. Two questions from me, please. First of all, in the APS region, whether you look at the Q3 or the nine month figures, you had strong volume growth, relatively low rate per case, and lower market shares. So this gives the impression that this may not be the right balance of performance in the region. So what are your thoughts on this?
And then secondly, you have been shifting focus to a broader part of the portfolio, like energy, the sport drinks, also more zero-sugar variants. So how do you make sure that the commercial strategy continues to support both the higher growth SKUs as well as the SKUs that are probably today more important for cash flow generation? So how do you prioritize?
Yeah. Thanks, Richard. On the first one, really happy with our APS performance. I think there's a couple of elements that play through some of the numbers you're looking at. One is obviously the accelerated growth of Indonesia as that market continues to grow and expand. That has an impact both in terms of case rates and mix. Then clearly, on a year-to-date basis, we are thankfully exiting the Suntory comp issue, which also had a very high revenue per case. When I look at our overall business, I feel really good. Also, share will be impacted a little bit as well as we grow Indonesia clearly as well.
On a trading level across New Zealand, Australia, Philippines, strong performance, top line, NSR per case, and share. Yeah, really happy with APS. To your second question, which is really a great question, as we continue to manage what I call good complexity into our business, I think technology helps. All of our sales reps have a very, I would say, well-developed platform where we can manage what we call a picture of success by outlet level, by environment. To a little bit to Ed's point earlier, segmentation for us is a key capability, not just on a pricing level, but also on an execution level.
Certainly technology allows us to bring a broader range of categories and a bigger portfolio into the hands of our sales reps at an outlet level and help them make the right choices in terms of distribution, priorities, pricing, and POS. I think that's going to continue to evolve, but that certainly allows us to manage what I call that good complexity, which ultimately will be a key driver of not just top-line growth, but also mix and profitability.
We have been investing a lot in those tools, and we partner with people that you'd expect, like Salesforce. We continue to look at how AI can play a role in making some of those choices even better. Certainly, that individual picture of success by outlet is a key capability, and that allows us to allow our reps to make the right choices. Ultimately, that's what it's all about for us. Yeah. Thank you.
Thanks, Damian.
Thank you. Our next question comes from the line of Gregory Porter from Evercore ISI. Please go ahead. Your line is open.
I don't know why it's Greg, but it's Robert Ottenstein here. Two questions, please. First one, I know this is a hard one, but maybe help us think about it, so as when we look to model next year. But any way to think about both the impact of weather and FIFA in the quarter? Any way to look at that? Again, I know it's very tough to do that with any precision, but any thoughts on that would be helpful. Then the second question, love to get any updated considerations in terms of capital allocation over the next 12 months and longer term, given that there's less Coca-Cola territories that are likely to be available over the long term. Thank you.
Thanks, Robert. Yeah, I mean, we've had a great execution of the FIFA World Cup. You see that in our numbers, and we have, as I called out, benefited from good weather in Europe. We've been planning for this for quite a while. I mean, the good thing about FIFA is we know it comes every four years. In the interim, we've got to cycle it. So, can't give too much away, but clearly, we've been working very hard with The Coca-Cola Company on the campaigns that are going to run over the same period next year, and they look great. So, a lot more to come on that. Probably we'll be able to share a bit of color around that in Q1.
But clearly, from an execution platform, I have no worries that we will have an equally impactful platform for the summer next year in Europe, and that's something we've been working hard on, and we want to even make it better. The weather will be the weather, and we'll deal with that as it comes, but we're very conscious that that's also been a bit of a tailwind for us this year, and we want to cycle that and grow next year. So, no change in that perspective. On capital allocation, clearly, as any bottler, we'd like to continue to grow the family in terms of territories.
But, as you said, there's probably reducing opportunities in that space. So, we'll talk more to our capital allocation in Q1, but I think, from our perspective, we don't see a lot changing in terms of our dividend policy, returning cash to shareholders. This year, we're doing up to EUR 1 billion share buybacks. I think most importantly, continue to invest in the business, particularly through capital, both in terms of capacity as we grow volume, which is a great use of capital if you're a bottler, and also in technology as we see the opportunities, as I mentioned earlier.
Particularly on the growth side, I think that's really where we want to deploy our AI and technology capabilities, but also on productivity to offset some of those cost headwinds that Ed talked to earlier. Clearly, back to the earlier point of Richard, one of the key enablers of that complexity will be more coolers. As we look at our capital allocation going forward, we'll continue to invest in cold drink availability.
That's just to give us the real estate that the portfolio deserves, and that's a great use of our capital, and that will continue to increase. We've seen a record year this year on cooler placements, and that's certainly, to Ed's point earlier, will support ongoing mix, as that's generally all single serve. Yeah. I don't see anything. Ed, is there anything else on capital? I think that's where we're at.
No, I think we're very happy with our ratings and got a very healthy balance sheet. Leverage just trending in the right direction towards the bottom of our range, and I think we're in a good place from a weighted average cost of debt, and will be for next year as well.
Very helpful. Thank you.
Thanks, Robert.
Thank you. There are no further questions at this time, so I will hand the call back to Damian for closing remarks.
Thank you, operator. Again, a big thank you for everybody for joining us today. As Ed and I have spoken to, we are very pleased with our Q3 and our year-to-date performance. As I talked to earlier, Q4 started well, and we are looking forward to a really strong end of the year as we move into our key summer season across Australia and New Zealand, and obviously Christmas across our other markets, and as we get prepared for Ramadan in Indonesia, which will be a great event for us again next year.
We do look forward to sharing our full-year results in February. At that point, we will also give some more clarity around our guidance for 2027. But in the meantime, again, thank you for joining us, and have a great rest of day. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.