WATCH: PepsiCo CEO pressed on SHRINKFLATION

Yeah, listen. Good to see you Lisa. It was a holistic transformation of the business. Price was one element. We thought that consumers need more value given the economic situations, but then we expanded space, we improved execution as you show there on your commercial. We have a lot of new innovation in spaces where consumers want to go, either no artificials or more functionality or better cooking methods. So overall, you put it all together and it's true. We increased consumption volume by 2% in our food business in North America, units 4%, almost 300 million new occasions in this first quarter. So we're very pleased with the overall transformation of the business. And yes, affordability was a big part, but not the only explanation of why the business is recovering its consumption and moving in the right direction.

Yeah, we're pleased with the execution of our pricing strategy, Lisa. The fact that we're giving consumers more value, especially in our multi-packs and our multi-serve, that has been a successful decision. It's bringing new families, but as I said, it's part of a broader re-engineering of the full business, including new innovation as you're showing now, or growing away from home and meeting the consumer in more occasions throughout the day part. We're also very pleased with the rest of the business, with the beverage business, and we're very pleased with the international business which continues to grow at mid-single digits for multiple years now and is a very scaled $40 billion business, accretive to PepsiCo, higher margins than the rest of PepsiCo. So we're pleased with the overall performance of the company and we'll continue to improve our performance hopefully in the sequential quarters.

Yes, let me qualify that number there. You know, we're moving to a third party all our case pack water that was a high volume, low margin business. So that will be completed by the end of April. So, if you eliminate case pack water, our volume is almost flat in North America beverages, which is a sequential improvement. We're seeing volume improvement in the second half of the year. And the levers are similar to our food business, right? Keep growing our away from home business. Keep innovating in spaces where consumers want to go. That is no sugar, functional hydration. And today we announced a big restage of Gatorade. We can talk about that if you wish. It is functional colas like prebiotics, eliminating artificial colors from all our portfolio including big brands like Mountain Dew and like Gatorade. So it's a holistic transformation of the portfolio again which we're very optimistic about where we're going in that part of the business. We continue to improve margins in North America beverages. That was a key pillar of the strategy as well.