Coca Cola HBC AG

LSE:CCH

Earnings Call Transcript 2018-Q3

[Operator]

Thank you for standing by, ladies and gentlemen, and welcome to Coca-Cola HBC's conference call for the 2018 Third Quarter Trading Update. We have with us Mr. Zoran Bogdanovic, Chief Executive Officer; Mr. Michalis Imellos, Chief Financial Officer; and Ms. Basak Kotler, Investor Relations Director. [Operator Instructions] I must also advise that this conference is being recorded today, Thursday, November 8, 2018. I now pass the floor to one of your speakers, Ms. Basak Kotler. Please go ahead.

[Basak Kotler, Investor Relations Director]

Good morning. Thank you for joining our call today to discuss Coca-Cola Hellenic Bottling Company's third quarter trading update. Today, I'm joined by our Chief Executive Officer, Zoran Bogdanovic; and our Chief Financial Officer, Michalis Imellos. Before we get started, let me remind everyone that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements in our trading update press release, which we published this morning. Although we have added a webcast facility to our call for ease of access, there will be no slide presentation today as per our usual practice for trading updates. We will start with some brief opening remarks from Zoran, and then open the floor to your questions. In order to facilitate a good Q&A session, we suggest that you ask your questions one at a time, waiting for us to answer one question before you ask another. The operator will keep your line open until we have exhausted all your questions. Let me now turn the call over to Zoran.

[Zoran Bogdanovic, CEO & Director]

Thank you, Basak. Good morning, everyone, and thank you for joining our call. We delivered a solid revenue performance in the quarter, with FX-neutral revenue growth of 4.5%. The volume component of the growth was strong, up 4.2%, with good delivery in the developing markets and the emerging markets, coupled with a stable performance in the established markets. The contribution to volume growth from our recently launched sparkling products was particularly pleasing, as was the development in transactions, which grew faster than volume in all 3 segments, helping us drive value growth faster than volume.FX-neutral revenue per case improved by 0.3% in the quarter on an expected temporary slowdown on recent trends, which I will come to in a minute. Currencies had a negative impact. So on a reported basis, net sales revenue grew by 2.6% compared to the prior year quarter.Let me now take you through the main drivers of volume and revenue per case on a segmental basis. The established markets volumes were broadly stable in the quarter following the 2.2% increase in the prior year period when volumes benefited from an exceptionally warm summer in Italy and Greece. Sparkling beverages' performance was relatively weak, particularly in Italy. However, we are pleased to see that, within the category, our low- and no-calorie Sparkling brands and our Adult propositions continue to do well. Coke Zero advanced by 13.5% in the quarter, and Schweppes by 7%. Water, ready-to-drink Tea, and Energy also grew well.Volume in developing markets increased by 11.3%. our actions to continuously improve our execution capability in the market, coupled with good weather in most of the countries during the summer, and the continuous favorable economic environment in the region resulted in growth in all countries in excess of mid-single digits. Poland was the standout performer, with mid-teens growth, maintaining the momentum we saw in the first half of the year. Emerging markets volumes increased by 4.1% with good contributions from all market. In Nigeria, the consumer continues to be under pressure. However, the flexibility we have to adjust the brand price and pack architecture allowed us to address affordability needs and adapt to strong competitive pressure, ultimately growing volumes by mid-single digits.In Russia, the improving underlying NARTD market held by the warmer summer underpinned our growth, while the environment remained intensely competitive. As anticipated, we saw a moderation in the very strong pace of growth from Romania, Ukraine, and Serbia, which were all citing high growth rates in the prior year period.Turning now to price and mix. As expected, the FX-neutral revenue per case growth of 0.3% was lower than the growth rates we have reported in recent quarters. Therefore, I would like to take a few minutes to explain this. The reasons for this moderation are varied and relate predominantly to the emerging and established market. In the emerging markets, we cycled the substantial price increases of 2017 in the second quarter of 2018 with no benefit in the third quarter. In addition, we saw faster growth in the organized trade in Russia and adapted to competitive pressure in other countries in the segment. The discontinuation of our distribution of the Brown-Forman premium spirits product in Russia also impacted the segment negatively, given the substantially higher price per case for spirits compared to NARTD beverages.In the established market, higher Water volumes and more intense promotional activity drove the lower FX-neutral revenue per case, mainly in Italy and Greece. In the developing segment, on the other hand, we improved price mix growth from 0.9% in the first half to 2.5% in the third quarter as we benefited from price increases in certain market and better category mix. Having implemented our planned pricing action in October, we expect the recovery in FX-neutral revenue per case in the fourth quarter.Now turning to the categories. In the first two quarters, in line with our strategy to expand our various choices, we launched a number of new categories, brands, flavors, and packages to meet our consumers' changing needs and preferences. In the third quarter, we focused our efforts on increasing distribution and repeat sales of these innovations. AdeZ plant-based beverages, Smartwater and Honest Tea, which represent the new categories and brands, continued to grow, albeit from a low base, and flavor innovations, such as Coca-Cola Zero Cherry, Fanta Zero Lemon and Grapefruit, made sizable contributions to volumes. In total, we sold 31.5 million unit cases of new product, flavors and packages, representing 5.1% of our volume in the quarter.In addition to this, we continued to evolve our recipes and reduce our sugar footprint, in line with our commitment to reduce the amount of sugar per 100 milliliter of product by 10% by 2020. We are pleased to report a successful quarter for Sparkling beverages, which grew by 4.7%. within Sparkling beverages, the low- and no-calorie variants grew strongly by 25.9% in the quarter while full-sugar variants also grew by 2.1%. Still drinks growth was 2.2%, with mixed performances from the key categories, as you will have seen in the press release.Let me just say how pleased I am with the execution of the FUZE Tea transition. In only 3 quarters, FUZE Tea has revitalized the category and already achieved 0.4% growth in the third quarter. In light of performance so far, we are now optimistic that the Ready-to-Drink Tea category can achieve growth in its first year of transition to Nestea of FUZE Tea.In conclusion, we made good progress in the third quarter and, as we execute our planned pricing plans, we expect to see an acceleration in the pace of price mix improvement in the fourth quarter. We are encouraged by the performance in October, and we look to the full-year confident that 2018 will be another year of good growth in both revenue and margins.With that, I will now hand over to the operator, and Michalis, and I will take any questions you may have. Thank you.

[Operator]

[Operator Instructions] The first one comes from Fernando Ferreira from Bank of America.

[Fernando Ferreira, Director]

First question, I was curious as to why Sparkling volumes in Western Europe for you were weak, or soft, where we saw all the breweries reporting very solid numbers and talking about the warm weather in the quarter. Was this a category issue for Sparkling CSDs, in your view? Or were there differences in weather patterns maybe in your countries relative to Northern Europe?

[Zoran Bogdanovic, CEO & Director]

Thank you, Fernando. I think, yes, you pointed to some exactly things that played a role. As we mentioned also in the press release, for example, Italy is our largest established market while -- had a kind of similar temperature-wise weather versus last year. But the most critical month of August was unusually more wet and cooler, and that made an impact. And then similar thing was also we saw in Austria. So definitely weather pattern played a role. And you know that that plays an important impact for us. Also last year we were recycling in Q3 last year's particularly strong summer in Italy and Greece, so that was another element. And then we saw the overall thing in Italy, as well, the at the category overall declined, was happening where our sugar variant was on decline. However, we do see that progressively, quarter-by-quarter, we are having continuous growth of our low- and no-sugar variants.

[Fernando Ferreira, Director]

I had a second question. I appreciate that this is a trading statement call, but I was just wondering, in the event that no acquisition materializes for you, can you basically discuss what are the other options you're studying to bring back your leverage to optimal levels?

[Michalis Imellos, Chief Financial Officer]

This is Michalis. So it's not bound to just1quarter. We have said on a number of occasions that there are a lot of potential opportunities that we would look into, bolt-on acquisitions on the non-Sparkling categories, Water and Juice primarily. So we want to have enough dry powder to be able to implement such potential M&As. And in due course, if we see that, really, none of this will materialize in a material way, then a special dividend will be considered.

[Operator]

The next question comes from the line of Edward Mundy from Jefferies.

[Edward Brampton Mundy, Research Analyst]

The first question is on innovation, where there was a big step-up on the third quarter versus the first half. Just to confirm in aggregate this is accretive to revenue per case, and are you about to comment on the pipeline of innovation into next year? And any early thoughts at this stage on the opportunity for coffee off the Hellenic platform?

[Zoran Bogdanovic, CEO & Director]

Hi, Ed. Well, there are a few questions here. Let me start with the first one, and then I'll ask you just to clarify the last one. So, with the innovations, as we very well said, this year has been an ease, really a year when we have launched more than ever categories, packages, flavors, also as a part of our continuous reformulations, et cetera. So, overall, we do see that that exactly fulfills the strategic intent that we have to expand our portfolio in line with our 24/7 total beverage company that we are evolving to. Some of the innovations immediately give us more tangible results, like reformulations in the Sparkling, where there are different flavors, new, exciting variants, versus when you enter in new categories, like for example AdeZ plant-based beverages or new variant of Tea with Honest, or Smartwater, so those type of things require, if you will, seeding and growing initiatives where we invest behind them more heavily in the first year as we launch them, so that's why their total impact in the immediate launching period is not as big as for anything that's already established. So for that reason, because of the supports we are providing with customer, we do -- those type of things you [immediately], for example, have listing fees. So that's why you do not see immediate impact on the NSR per case. But overall, these categories are all the higher revenue per case than average of their categories. Yes, you mentioned for the future. We do have -- and together with Coca-Cola company, we are working intensively very well together on not only what's for next year but for years to come. I'm personally confident and very much encouraged with the pipeline. However, I would like to emphasize that it's our responsibility as well to first ensure that what we have launched this year, that we properly build scale for the benefits we expect. And then Ed, if I can ask you to clarify the piece on the coffee that you asked?

[Edward Brampton Mundy, Research Analyst]

Yes. The opportunity for coffee off the Hellenic platform.

[Zoran Bogdanovic, CEO & Director]

Well, for a number of years, we do believe that Coffee is really the category that is excellent one and necessary one if you want to be a 24/7 total beverage company. And you know that, in a few of our markets, we do have distribution of coffee. At the same time also, we are very closely watching on the move that Coca-Cola Company has announced with Costa. Obviously, we are not part of that deal, and they are finishing all the regulatory steps and approvals, which we are hopeful that Coca-Cola Company will bring to successful completion. And after that is done, we are very open and keen that, together with Coca-Cola Company, we discuss what does that mean for us as a bottler, and how can we contribute jointly to that excellent story that Coca-Cola Company is about to do.

[Edward Brampton Mundy, Research Analyst]

My second question is on input costs. I appreciate this isn't a call where you typically talk about input costs, but I think with the H1 results, you are preliminarily guiding towards a low single-digit increase in 2019. Is that still the case, or has much changed in that regard?

[Michalis Imellos, Chief Financial Officer]

So we started the year with an expectation for low single-digit increase. Back in August during our Half 1 call, we were seeing more of a flattish performance for the full year. Now we believe that we will be slightly better than that as sugar has developed a lot better on expectations up to recently. On the other side, resin has been performing a little bit worse than expectations. So on balance, we see some opportunity to have a marginal decline in cost per case current neutral on a full-year base.

[Edward Brampton Mundy, Research Analyst]

And for '19, I think the early guidance was for a low single-digit increase for 2019, albeit it's still quite early on to give that guidance.

[Michalis Imellos, Chief Financial Officer]

It is really early. We have a lot of moving parts, particularly with oil and resin. There is a lot of volatility, particularly in quarter 4. So we would really like to come back in February and give a more firm guidance with regard to '19.

[Edward Brampton Mundy, Research Analyst]

And my final question, we touched on it slightly earlier in the call, is around M&A and use of the balance sheet. Do you feel that the external environment, which has, arguably, become a little bit more volatile in recent months, especially in some of the emerging markets, does that impact your appetite for M&A?

[Zoran Bogdanovic, CEO & Director]

No, Ed. We remain very open and active in looking for the opportunities that can make an appropriate bolt-on fit for us. So no, we as Hellenic are very keen and open, and we are actively evaluating and looking into a number of potential opportunities.

[Operator]

The next question comes from the line of Constantin Hesse from Deutsche Bank.

[Constantin Harald Hesse, Research Analyst]

A quick question regarding price mix. So you delivered an increase of 0.3% in Q3. And just based on some quick math, you would probably need something close to 3.5%, 4% price mix in Q4 in order to see the acceleration that you expected you mentioned before. Now, can we expect revenue growth management initiatives, selective price increases, the price increase you took in October, the lower promo activity in certain markets, to be enough to drive this? Is there anything maybe that you expect to be better than you had previously thought? Just some color on this would be great.

[Michalis Imellos, Chief Financial Officer]

So let me just start with quarter 3 so that we have an understanding of what happened with this 0.3% and the optical slowed down versus the first half trend of 1.8%. So in quarter 3, we had 3, should I call them, technical factors that slowed down the growth to revenue per case. Number one was the cycling of the 3 price increases in Nigeria, which we took in late 2016 and early 2017. And if you translate that to percentage points of growth in the revenue per case, that was an unfavorable impact of 1.1 percentage points. The second one was the discontinuation of the Brown-Forman premium spirits distribution contract in Russia. And that negatively impacted category mix by about 0.9 percentage points of growth. And finally, the third one is a favorable one. Clearly, the extra pricing that we took in Ireland in April and May of this year to offset the sugar tax had a favorable impact of around 0.5 percentage point. So those 3, if you -- the net effect of those 3 is around 1.5 percentage point, which if you add it back to the 0.3%, you get to more or less the trend that we saw in the first half. Now, as you very correctly said, back in August during our first half results call, we talked about an acceleration of the revenue per case currency-neutral growth trend. And at that time, obviously we had taken into account fully those 3 technical factors because they were known and expected. Now, in the second half, this acceleration is challenging because there have been mainly 2 adverse factors that developed in quarter 3 beyond our original expectations, one being the negative impact on category mix from the Water volumes acceleration and establish, and that was thanks to the good summer weather that also Zoran mentioned earlier, which had a negative impact on the revenue per case, but obviously boosted volumes, and we saw the positive impact on the volume side. So, net-net, a good development overall on the revenue. The second one is the fact that we see, and we saw in quarter 3, increased competitive pressure in a few countries, in established and emerging, and that is something that had a negative impact in the revenue per case, and it is already practically in the actuals now. So looking ahead, and with all these impacts, as I said, in the actuals in quarter 3, we expect that, on a full-year basis, the revenue per case growth will be marginally below the trends that we saw in the first half, especially as we continue to manage through some ongoing challenging competitive environments, for example the biggest one that comes to mind is Nigeria. And I would say that, with October also behind us now, the trading in the month of October was strong, and this enforces our view that, for the full year, we will be marginally below the growth that we saw in the first half. Now, clearly, volumes have been accelerating. Revenue per case, as I said, slightly below the expectations we had in the first half. So overall, revenue progressing very well, and we expect to see on a full-year basis very similar trends to what we saw last year in terms of the growth, and with the benefit that I mentioned earlier to Ed's question on the raw materials. We expect that overall on balance, on a full-year basis, profitability and margins will develop in line with what we originally expected.

[Operator]

The next question comes from the line of Mitch Collett from Goldman Sachs.

[Mitchell John Collett, Executive Director]

Just to follow up on the margin question, you said it was in line with what you originally expected. I think from the 1H stage, that was more than 60 basis points that you delivered in the first half, but less than the 120 basis points you delivered in F '17. Can you confirm that's still [a prize]? And then secondly, I was interested in the increase in your single-serve mix, which I think you said was up 220 basis points, which I guess I would have thought would have been accretive to revenue per case. Is that because -- or is that being accretive to revenue per case? Or are you perhaps growing single-serve by bringing prices down slightly? Perhaps you could comment on that.

[Zoran Bogdanovic, CEO & Director]

This is Zoran. So I'll take first the second question, then Michalis will take the first one on the margin. Well, shortly, you're right. Smaller packages and single-serve does have a positive impact on our revenue per case, and that has been something that did have favorable impact in all the pluses and minuses. However, the element that Michalis just mentioned in the answer to Constantin were stronger so that, in net-net, we have finished with NSR per case as you have seen. But you're absolutely right, and that's why it is part of our strategy that we continuously focus and put strong attention and initiatives and programs behind single-serve smaller packages, and that remains part of our strategy and part of the value creation algorithm, going forward and for the future. Thank you. Michalis?

[Michalis Imellos, Chief Financial Officer]

So yes, first of all, as you correctly said, in 2017 we closed at 120 bps margin expansion. We did flag at the time that a significant part of that was thanks to the positive correction, should I call it, to the ruble in 2017. And we quantified that to around 50 basis points. So the real underlying margin expansion in 2017 was around 70 basis points. And in the first half of '18, we were 60 basis points up in the margin, and we talked at the time about the second half being a bit better than the first half. And with everything that I mentioned, we still see exactly those expectations holding for 2018.

[Mitchell John Collett, Executive Director]

Understood. And then perhaps one follow-up on input costs for next year. I know you said it's a bit early to say, but I think you said again at the first half stage that you had sugar mostly covered. I think aluminum was one-third covered, and resin wasn't covered. I think what you said about the rest of this year was there was perhaps some price volatility on resin. I guess can we infer, therefore, that there's probably some input cost pressure likely for next year?

[Zoran Bogdanovic, CEO & Director]

Yes. So we have seen, on the one hand, fantastic run in terms of the sugar price, very, very good prices up to recently at very low levels. And there are -- even though for Russia and Nigeria we are quite well covered, there are a lot of other countries that are affected by the world market sugar prices, so they get the benefit. On the other side, the resin has developed in completely the opposite direction with the recent oil price growth, and also some other supply-demand issues for this commodity. So we've seen a very, very volatile environment, temporary big increases in the resin prices recently. There are mixed messages about next year in terms of the forward curves for some elements of the PET price, or the resin price. That's why I'm saying it's very early for us to really call it in combination with the sugar prices, but at this point and where we stand, yes, I would see some upward pressure versus what we had guided earlier for 2019. But we will come back in February with a more firm view as to where we are heading in terms of input costs.

[Operator]

The next question comes from the line of Chris Pitcher from Redburn.

[Chris Pitcher, Partner of Beverages Research]

A question on Nigeria. It sounds like the competitive environment is tougher there, and the price increases that perhaps you were previously hoping to put through in October into November aren't materializing. And I'm interested, are you able to offset the margin pressures in Nigeria domestically? Or are we looking at another loss-making year there with profit being offset elsewhere across the group, particularly, obviously, say the volume leverage coming through in Poland? Could I just understand the dynamics there, please?

[Zoran Bogdanovic, CEO & Director]

So as Michalis mentioned, in Nigeria, we do see that the competitive dynamic definitely is more intense and, honestly, beyond our expectations as we saw it in the beginning of the year. We did have plans and thoughts for pricing actions in Q4. Part of them we have done in certain parts of the region -- sorry, of the country -- because in Nigeria, with our now-increasingly segmented execution approach, we are not doing things with one-size-fits-all. So in some areas, we have been able to do some positive pricing moves. At the same time, we also had to adjust our game plan based on relevant competitive intensities that we see in certain parts of Nigeria, and we have responded to that. So net-net, I would expect that Q4, price mix-wise, is going to be stable versus last year. Now, I want to use the opportunity, Chris, and just to remind you that, from Q4 of '16 and then in the period of only 6 months, we have been able to successfully execute 3 consecutive price increases. And because of our evolved [OBBC], meaning Brand, Pack Price, Architecture that we are doing, and now even more by region, we have been able to trade on a premium level versus the competitors, which, let's say, only 2, 3 years ago wasn't the case. And in terms of what you asked, Nigeria is not negative. We focus strongly behind Nigeria. We continue to invest because our belief and commitment behind this market is as strong as it has ever been. And we are building very sound and strong business here, fueled by excellent team we have down there, which I would really like to highlight. And last point is that we as Hellenic have excellent, and I would say we are blessed with a great territory composition that we have across 28 market. So that enables us, that every year, different segments and corners of Europe, including Nigeria and Africa, are helping us so that we can use various levers so that overall as a Hellenic, we are progressing in line with our targets and commitments.

[Chris Pitcher, Partner of Beverages Research]

Can you confirm there for the profitability is developing as expected in Nigeria? I'm trying to understand what…

[Zoran Bogdanovic, CEO & Director]

Sorry, did you ask if profitability is developing as expected in Nigeria?

[Chris Pitcher, Partner of Beverages Research]

Yes, despite not getting the full price increases planned through in Q4. Is that what you're saying?

[Zoran Bogdanovic, CEO & Director]

Yes. Look, I would say that it is really in the neighborhood of expectations, where we saw Nigeria coming through this year, because, mind you, apart from the price mix in this particular quarter, or a few quarters, also we have so many other initiatives that we are doing on-ground, our work and the team's work on the ground in terms of cost control. Our infrastructure is shaping modernization and automation of our operations, which is enabling us to continuously reduce the cost and make us more competitive. It's having a big impact in the overall algorithm of what we do in that country. So for that reason, we are progressing fairly in line with the expectations.

[Chris Pitcher, Partner of Beverages Research]

But just to confirm, you're back into profit in Nigeria? I suppose that's where I'm trying to get to.

[Zoran Bogdanovic, CEO & Director]

Yes.

[Operator]

[Operator Instructions] We do have a question coming through, and this comes from the line of Stamatis Draziotis from Eurobank Equities.

[Stamatios Draziotis, Research Analyst]

Could I ask if you could provide a bit more granularity on the performance in developing countries? You seem to have posted very strong volume growth, and this seems to have been accompanied by quite healthy price mix. Could you maybe talk a bit about how your performance compares with the rest of the NARTD market in the key countries, in the particular region, please?

[Zoran Bogdanovic, CEO & Director]

Yes, as you have seen and I think your question also comes from there. Developing market have been very fertile segment of markets for us in 2018, with very strong volume growth so far. And as we said what we are doing, going forward, is that we are doing this little bit of rebalancing, and that's why what we expect to see is, let's say, little bit slower volume development with increasing price mix. In the whole -- this segment is pretty much -- well, first of all, driven by Poland, where we have been growing sizably. And overall, I would say, across the whole segment versus the competitors, we have been doing pretty well, and that's the reason for this performance, if I can say, is a reflection of the activities that we are doing across the market, whether that's our continuous development of route to market where we are doing changes which are having, as a result, increase of the customer-facing time with our targeted segment of customers, which we call Gold and Silver, and also with the reflection that we are introducing specialized teams and routes for key accounts and premium HoReCa outlets. Also this year, I have to highlight that we really had strong marketing and sales campaigns in Poland, but also in Hungary, in Croatia, Slovenia. So I would really say that a number of elements have worked for us really well. Also, let me just highlight that innovations and flavor introductions that we have done, let me give you here concrete example with the flavors in Coke Zero, seasonal flavors in Fanta and Sprite in Poland have had excellent contribution. A re-launch of Kinley, which is our adult sparkling proposition in Poland, after the re-launch is growing more than 40%. Also a re-launch of Powerade supported our growth because it's growing 33%. And programs that we have behind Energy drinks are giving us strong momentum where the volumes were up even more than 80%. So these are some of the things. Let me also highlight, I think Michalis briefly touched on that, that in few countries, and Poland also was definitely one of them, we had quite strong volume, growth of volume on Water, which also was a part of reflection in our program with wholesalers, which gave very good results. And how we also now are shifting the game, where we are focusing more on promotions behind smaller packs and single-serve packs versus promotions on the multi-serve PT packages. So, I mean, I could talk for much more about the whole segment, but I will let you let me know if there is anything more particularly that you would like me to address.

[Stamatios Draziotis, Research Analyst]

Just a quick follow-up. To what extent do you think that weather played a part in the double-digit volume growth? I know it's quite hard to differentiate, but if you could--.

[Zoran Bogdanovic, CEO & Director]

Yes. Yes, you are right. What we said in -- I think in our release, we said with mixed weather conditions. I highlighted a few minutes ago when I was talking about Italy and Greece as markets where we did not have -- here we were recycling, exceptional weather, and that whole Mediterranean strip, and you probably know from West Europe, Spain, examples [so] didn't have good weather, like -- however, the Northern part of our territory is where Poland, in this segment is part of, really had excellent weather. And that did play a role, absolutely.

[Stamatios Draziotis, Research Analyst]

And just a final question on Italy. Just wondering, have you seen any major, I don't know, change in the trends in the country recently in the last few weeks against the backdrop of the whole political situation there?

[Zoran Bogdanovic, CEO & Director]

Look, Italy evidently, I think you said very well, we see that in Q3 the whole NARTD market declined. And we do not see any impact on the customers. That wouldn?t be anything worrying. However, we do see that the overall consumption from the consumers has a bit slowed down. We do see it. We do also see that it's not only of the categories of ours, but also broader. So definitely, with this political backdrop and dynamic that's happening there probably is making consumers a bit more cautious in their consumptions versus prior periods and years. So we do see that, and that, to extent, definitely impacts also what we see in our own numbers. We are taking that into account as we are also building plants, going forward, especially as in Italy, we are focusing and developing our route to market, where our increasing focus on out-of-home channels, with dedicated teams and programs, is something that we see as a countermeasure of how we want to drive revenue growth next year, and also how we want to continue creating and driving value in this very important country not only in the segment but for the whole Hellenic.

[Operator]

The next question comes from the line of Richard Felton from Morgan Stanley.

[Richard Felton, Equity Analyst]

Just two from me, please. My first question is on Greece, where you've reported your seventh consecutive quarter of volume growth, so clearly very strong momentum in that business. But, if we take a step back, your volume increase is till around 30% lower than it had been in 2009. Is returning to similar levels that you had pre-crisis a realistic target? Or have there been structural changes in that market, which means that's no longer a realistic target?

[Zoran Bogdanovic, CEO & Director]

Thanks, Richard. Well, having been in Greece myself from 2011 to '13, and having gone through exactly the intense period of that crisis, I know very well what the country has gone through, and consumers. So definitely, the crisis that I would say that Greece is, slowly but surely, getting out of has made an impact, a long-term impact on Greece, going forward. And that's why we do see that we are building and rebuilding that business now for a number of last years quite successfully, taking into account new reality. What that means specifically is that we do see now, year-on-year and quarter-on-quarter, continued growth. This is one of our operations that truly operates as a 24/7 total beverage company, with our presence in almost all categories where we play a significant role. And what has happened also in Greece over the last couple of years is that concentration of customers in the organized trade has been something that has developed, so it has become more concentrated, like some of the Western Europe markets. Secondly, the crisis has as a result that the number of customers and outlets went out of the business. So, our customer base has also reduced over the number of years so that we are working against the new base. Now, at the same time, I would say that we see that now for a couple of years, and this year was no exception, is that overall tourism numbers are back on track in Greece. We see year-on-year how it is improving. We are leveraging that really well, and our teams on the ground. So overall, to sum up my long answer, yes, there is a change in the reshape of Greek market as a market, and then our business. And I would say that we are in a very healthy and sustainable way building it. And while the whole market and the whole environment is slowly positively moving up, I really remain, and I am very confident and positive about the prospect of our business there and what it is going to bring us for the years to come.

[Richard Felton, Equity Analyst]

My second question is on Energy, which the energy portfolio rollout seems to be progressing very well. Could you please remind us what percentage you grew per volume the Energy portfolio now accounts for and what the average revenue per case for Energy is compared to your overall portfolio?

[Zoran Bogdanovic, CEO & Director]

Yes. So, indeed, Energy is an increasingly important category, but to be precise, Energy category in our total volume is just over 1%, so 1.3%, 1.4%. However, revenue is higher. It must be around more than 2%, something like this. So definitely you can see that the value, and also the profitability of the category, is something that we like. And average NSR per case from top of my head, however, definitely it is one of the highest categories that we have.

[Operator]

There are no further questions, so I will hand the call back over to your hosts for any concluding remarks.

[Zoran Bogdanovic, CEO & Director]

Great. I want to thank you for joining us today and for all your questions that facilitated a good discussion around our third quarter performance. Let me leave with the following thought. We are partnering with our customers and continuously strengthening our route to market to capture the growth opportunities in every channel while offering a product portfolio that is evolving with speed to meet the changing consumer preferences. Our mindset is becoming even more consumer and customer-centric, while our strategic initiatives deliver top line growth and margin expansion consistently. We look forward to sharing more progress with you in the coming periods. Thank you very much for joining us today. Have a great day.

[Operator]

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