The Kraft Heinz Company (KHC) Barclays Global Consumer Staples Conference (Transcript)

The Kraft Heinz Company (NASDAQ:KHC) Barclays Global Consumer Staples Conference Call September 6, 2023 11:15 AM ET

Company Participants

Carlos Abrams-Rivera – President of Kraft Heinz

Miguel Patricio – Chief Executive Officer

Andre Maciel – Executive Vice President and Global Chief Financial Officer

Conference Call Participants

Andrew Lazar – Barclays Bank PLC

Andrew Lazar

Why don’t we kick this off, our next fireside chat with Kraft Heinz. With me today are Chairman and CEO, Miguel Patricio; CFO, Andre Maciel; and EVP and President of North America as well as CEO-elect, Carlos Abrams-Rivera.

Welcome gentlemen, it’s truly great to be with you in Boston. And congratulations to you, Carlos, on being named the next CEO effective the start of 2024.

Carlos Abrams-Rivera

Thank you.

Andrew Lazar

I think that’s a really good place to start, on CEO succession. Maybe first to you, Miguel. Why is now the right time for Carlos to be appointed CEO and for you to move to Non-Executive Chair?

Miguel Patricio

It’s the right time because it’s the right thing to do for business. That’s why it’s the right time. It’s the right thing to do for the business, Andrew, because first, Carlos is ready to become the CEO. And when you have someone in the team that is ready, we need to start thinking or to start moving, in that sense. The right thing to do also because I see the combination of Carlos as the CEO and Miguel as Chairman will be a stronger combination. And it’s the right thing to do as well because this – at the end of the year, I will be in the company for almost five years. I mean, these first five years, I think I was really the right person to be in charge. We went through a lot. The company was on the bottom, and with lack of hope and beliefs and also a lack of talent. That’s definitely not the situation there because Heinz is now very strong company with a strong team, very engaged. I mean, great things.

But I believe that moving forward, we’ll need some different skills. I could definitely stay just a couple of more years as Head – as the CEO, but I thought that didn’t make sense to postpone this moment because, again, Carlos is ready because I believe that in this new phase, he will be a better CEO than myself would be. So that is really the reason behind, Andrew, and so I think that both are going to be a great thing to the other talent.

Andrew Lazar

Thank you. And so maybe that brings us over to you, Carlos, as you take the helm. We’d love some perspective on sort of your vision on where you see Kraft Heinz going? And how are you going to get there?

Carlos Abrams-Rivera

Well, after those words from Miguel, let me just first say thank you, Miguel.

Andrew Lazar

It was self-deprecating as well.

Carlos Abrams-Rivera

And by the way, that’s the way he is. And he had been such a great leader for us at Kraft Heinz. And when Miguel talks about the belief the company has, it is because of the way he has shaped the company and truly brought the belief back in the company. And I’ve been here now at Kraft Heinz 3.5 years, and first of all, I should say it’s quite a privilege and honor to be elected CEO. I began my career over 25 years ago in what was then Kraft Foods. And as I went to different companies and being part now of Kraft Heinz, has been the honor of my life.

And you asked, Andrew, about strategy. Over the last 3.5 years, I’ve worked side by side with Miguel. The strategy, the values that we have launched, our strategies that I completely endorse and support. Whether that is our focus on our three pillars of growth of the U.S. growth platforms, our emerging markets, our Foodservice business, that continues to be something that I fully support, and I see us continuing as we go forward full stop.

I think right now, we have approached in this month before officially taking the role, Andrew is doing a bit about listening and learning tours, so spending quite a bit of time traveling across the world, listen to our teams and what’s working, not working, and how we can do better. I think some things that I believe that we’ll be able to now, within the same strategy, but accelerate as we go forward. I think Andrew, in particular, I know you have heard closely how we have done this work on agile scale, for example, in North America. How we have reengineered the company with the right technology-enabled tools for us to improve our performance. I think those are areas that we can drive more globally now as we go forward.

I think the focus on efficiency is that we have done so well over the last few years also enabled by technology. That’s an area that we’re going to be able to accelerate as we go forward as well and think about where we can truly leverage our scale. In North America, we have spent all time renovating our brands. I think, at this point, we have renovated over 90% of our portfolio over the last three years. And I think that, supported with strong innovation, I think, is an area that the focus of brands with great products, resilience, qualification, inter-equity and the innovation to support that, I think is something we will continue.

And then we see joint partnerships being a truly acceleration for us at Kraft Heinz. And we have done that in places like our joint venture with NotCo. It allows us to get into plant-based and leverage our North America brands. There would be opportunity for us to think about partnerships more globally in our company as well as we go forward. But again, things that are true for us that we potentially can accelerate. One thing that I’ll tell you that will not change is my commitment to the culture that Miguel has brought to the company. I think this sense of ownership and collaboration that Miguel spearheaded for us is something that I’m committed to, and will continue to strengthen as we go forward.

Question-and-Answer Session

Q – Andrew Lazar

Great. Thanks for that. And maybe to start off a little bit with your largest segment in U.S. retail. The company’s long-term topline growth algorithm calls for 2% to 3% organic net sales growth driven by about 1% to 2% growth in U.S. retail GROW platforms, 7% growth in Foodservice and about 13% growth in emerging markets. Putting aside sort of the near-term volatility in the industry at this point, I guess, what are the key drivers to be able to deliver that growth in U.S. retail specifically? And how do you think about the balance in U.S. retail between volume and price sort of thing going forward?

Carlos Abrams-Rivera

Yes. I mean, I think for – let me give you a picture first, I think, of the platforms and how we look at it. We have these three areas where growth platforms account for about two-thirds of our business in the U.S., and that includes, in fact, Taste Elevation, where our sauces are Easy Meals where our Mac and Cheese businesses and brands like Lunchables in Philadelphia, those continue to do well. In Q2, they grew Taste Elevation 8%, Easy Meals 6%. And if you look at – and even now combined, we are actually growing share in those businesses as well. And we see Lunchables business and Ketchup business actually improving as we go through the end of the year here. So those areas that we have distorted the resources, we continue to see improvement.

If you look at our business like Energize, where essentially is our Oscar Mayer business, it’s about 15% of our business. And we think of that as an area that we need to make sure we maintain our focus and discipline on profitability. So in Q2, we grew high-single digits in EBITDA, even though there were some topline challenges in the quarter two as maybe some of our competitors didn’t focus in margins as much as we did. But for us, it was important to make sure that we continue to stay that focus on gross margin and improving the profitability of the business. And then there’s brands that are in our – what we call stabilized business, and those are things like desserts and flavor hydration. And those businesses, in fact, in Q2, our desserts business grew 2%, our flavor hydration was flattish. So those are businesses that we’re going to continue to support, because we cannot allow them to be leaky bucket in our business.

So for us is, how do we make sure we continue to stay focused on renovating those businesses? And JELL-O has been the last one we’ve done in which we renovated the business, and in fact, focus a lot more on what’s been right in the right show with the right assortment. And a lot of our focus right now is making sure that as we think about our volumes that we are not only protecting what’s happening in the promotional calendar, but also what’s happening in terms of the everyday displays in our stores. That is part of the success as we go forward.

First thing that you’re going to see promote, Andrew, is how do we continue to support our business with the right innovation that allows us to try the volume? We see that in our long-term algorithm, the assumptions, we have about half volume, half pricing, and that kind of come out of us being able to recycle the pricing that we did last year, and it would be at the beginning of the year, but it also is us continue investing in our brands. In Q2, we invested about 23% more in marketing dollars. We continue to invest in R&D, another 10% year-to-date in our resource in R&D, and more for driving innovation that is sustainable for consumers as well, too. We have much better, stronger consumer insights that allow us to have innovation that actually drive the volume that we are going to continue to see as we go in the future.

Andrew Lazar

In the context of the 1% to 2% U.S. retail long-term growth algorithm, I guess, what are your expectations for each of the Grow, Energize and Stabilize sort of sub-segments?

Carlos Abrams-Rivera

Rather than, I think – the way I’ll tell you is that we have a certain role within those particular categories versus kind of to give you a stand for a specific number. For us, the Grow platforms are going to be the places that we’re going to disproportionately drive a particular growth. Those are going to be places that not only because we believe we have an advantage, but also because places that we can actually lever are global scale. I mean truly, in a Taste Elevation platform, we have a high corner store brand of that particular platform. It’s a business that we’re growing everywhere that we go, and that is true whether you’re in Brazil or whether you’re in Middle East or you’re in Poland, we are growing those brands in a way that is – that truly can lever our global scale and our expertise in Taste Elevation. And we see both Taste Elevation and Easy Meals as well as Lunchables and cream cheese as the kind of areas that it will be driving the particular growth.

For us is, as I mentioned, a stabilized business. It’s making sure they are, in a way, protected so that we continue to make sure they don’t create that kind of disadvantage for us. In the past, we haven’t thought about it that way in the past. I think some of the businesses we have kind of let go too much. If you think about, for example, even our coffee brand, which is part of our Stabilize platforms, we are actually investing quite a bit of innovation in coffee. In fact, it’s our retail to – restaurant to retail platform in which we have now launched IHOP into retail, which is growing significantly our opportunities to grow in innovation in this year. Whether it’s bringing you to the real ideas like it is our Iced Latte for Maxwell House brands. Those are areas that allows us to make sure that we have improved distribution in our stabilized categories while balancing the amount of resources that we spend behind them.

And as I said in our Energize platform, Oscar Mayer is, yes, spending money in marketing to continue to build a strong Oscar Mayer brand, but making sure that we are staying focused on the profitability of the business. I think for us, we cannot lose – we cannot be prisoners of the moment and not think about the long-term viability of the business, which will come from our protecting that gross margin.

Andrew Lazar

All right. Maybe a couple on sort of the topic of promotions and pricing. I guess why are KHC’s promotional levels currently sort of lagging that of competitors? Is it strictly supply-related? Or does KHC plan to maintain structurally lower promotional levels?

Carlos Abrams-Rivera

Well, for the most part, and I assume, Andrew, that you talked specifically about the U.S., so I’ll connect to that. If you look at our business today and you compare it to 2019, today, we’re about 10 points better than we were in 2019 in terms of level of promotions. And for us, that is critical. And the way we are able to do that is by us making sure that all the investment we have made in AI-enabled solutions on how we think about revenue management make that any investments that we’re making promotion has a high ROI. In fact, our ROI has improved 15 points from a year-ago. So we are continuing – we are promoting more in a disciplined way, and that continues going to be a way that we’re going to move forward.

If you compare that to our competition, I’ll say what we’ve seen so far is that versus 2019, many of our branded players are probably like 4% down from 2019. So they have actually quite a bit of more aggressiveness in terms of their promotion calendar, private label actually also are flat to 2019, so they also are promoting more. Now we need to make sure that, again, we are playing this game for the long-term and protecting those margins.

There is some liability between categories in which you’ll see depending on particularly in this season, so normally, in Q4, you may see a little more promotion that happens. But it’s always going to be with that level of discipline, even maintaining kind of the mid-30% proportional levels. But throughout the year, you’ll see that Q3 [indiscernible] that we have less promotional events, a little bit more in Q4. But technically, you’ll see more in that kind of mid-30. I don’t know, Andre, anything else that I missed?

Andre Maciel

You said it mostly. So Andrew, the answer – the direct answer to your question is, structurally, we believe that we’re going to be operating at lower level as 2019. Remember that we have increased promotions like $1 billion from 2017 to 2019 in the U.S. alone, and a good chunk of that was very negative return promotions to us and customers.

So I think with all the investments we have made, the technology and people in – around the world, particularly in the U.S., we have 50 people dedicated to pricing optimization in the U.S. alone, millions of dollars in our proprietary solution that we have visibility for hundreds of the events that we run in the U.S., that we continue to learn from the past events to improve the calendar forward. We are very content we can maintain our lower level of promotions moving forward while increasing the needs that we have for the dollars that were deployed. As we have said in earnings, the promotions will be higher in the second half versus the first half, in part also because service levels are mostly recovered by now, but that’s according to the guidance. And because inflation keeps moderating, we believe we’re going to be able to achieve more of the gross margin that we have now into the remaining of the year.

Andrew Lazar

And just talking about we’ve seen promotional levels in certain categories return to 2019 levels from some branded competitors. We’ve also seen price gaps remain elevated since you raised prices in certain categories earlier this year. Are there any categories in particular where you see an unusual level of promotion? Or competitors acting sort of like irrationally?

Carlos Abrams-Rivera

I think the one place that maybe we’ve seen that the proportionate kind of level of promotion, I would say, is within the meat business. I think the cocoa business is one where we are – basically we invested in marketing, we have been investing on the – those where have put in those dollars and put it back into promotional dollars. Maybe you think it was the right thing in order for us just to rent volume, and some of our competition decided they wanted to do that. So for us, it was important that we maintain the discipline on how we protect our margins and – even though in the short-term, there maybe some volume impact on cold cuts, we think that is the right thing for us to do for the long-term. And now, we’re also going to continue to support those businesses, but just not to the degree that it will impact ability to do business for the long-term.

Andrew Lazar

As you mentioned, given the company needed some of these pricing actions to protect profitability, I guess, how do you do that? Does it – you do ultimately need to return some price, depending on where underlying commodities go.

Andre Maciel

Our price, as we said, price for the year is higher. We implemented that at the beginning of the year, the normal price needed. And we have already contemplated, as we just said, more promotions in the second half of the year. But as inflation keeps moderating and the supply chain efficiencies keep over delivering to our expectations, remember that we raised the buy from $400 million to $500 million this year. And year-to-date, we were – the first half to date, we are ahead of fixing, so we’re doing very well, and this is helping us to protect the gross margin moving forward. As the inflation continues to moderate, we have room there to be deploying more promotions. That’s what we did to help protect the profitability.

Andrew Lazar

It’s interesting. As the benefit from pricing has now started to wane, right, for the industry, a number of companies have seen sort of a delayed, let’s say, recovery in volume. And this is relative to their initial expectations. I guess, what do you believe is driving this dynamic? How are you thinking about the progression of topline trends in U.S. retail, sort of broadly speaking, over the next six to 12 months? Because we’re not necessarily seeing some dramatic trade down to private label, we’re not necessarily seeing some dramatic shift to away from home meeting. Doesn’t appear consumers are, at this stage, eating fewer calories. So there’s lots of theories that are kind of out there, but it still feels like there’s a puzzle to a lot of investors in the room. There’s a lot of travel over the summer, consumers are guarding against waste a little more, they’re kind of hunkering down, lots of different sort of theories out there. But what’s your sense, maybe, on work through, broadly speaking, why some of the volume recovery has been a little bit maybe less rapid than a number of the industry had hoped for?

Carlos Abrams-Rivera

I mean, there was a couple of events this year, right, that affected volumes, and then I’ll guess specifically on how our consumers see it. But certainly, the pricing that we have taken is one of those that had an impact on volume. And the snap, the reality of pulling back on the snap, but also quite a bit affected the volume that we sell, and that was something that we expected. And in fact, that was within our guidance of how we think about returning to historical level of elasticity as we said in the second half. I think others might have expected that to pay for longer, but we kind of assumed that it will go back to the historical levels. And it was better today than it was in historical levels in terms of elasticity, but we’re returning to those levels.

I think what I’ll tell you though, that we are seeing, is that what was happening in the past couple of years, too, is that if you think about a family who was putting a number of items in the table for lunch or for dinner, the number of ingredients that you were having during that time, I think, used to be more than it is today, number one. So it’s – rather than have a steak and salad and the dessert and everything together, they may be choosing to have less number of meals, less number of plates in that particular occasion.

The second thing that we’re seeing is that the actual calorie consumption have shifted. So if you think about the fact that today, we are seeing places where, for example, our pasta sauce business are growing, where consumers are now focused more in terms of getting more carbohydrates, maybe less protein in order to have more filling opportunity to actually drive value within the family. So those consumers are focused on the cash flow. They’re also thinking about how to make a trade off in terms of the actual total calorie consumption and may be cheaper, maybe less volume as well. If you want to have a bowl of pasta rather than a steak with a salad and a potato, it’s like all those things have a shift in terms of the amount of volume that people are eating, but the actual calorie content may be not that different for the family.

Andrew Lazar

Got it. Maybe to close out our discussion on U.S. retail with just the discussion on market share. The last couple of conference calls, you’ve kind of broken out where your shares are improving, where you expect shares to start to improve based on whether it be capacity-related or service level related items and whatnot. And then where you’ve got a smaller bucket where there’s still more work to do on the underlying business to improve share. Maybe you can just kind of update us on where you see sort of the share progress right now?

Carlos Abrams-Rivera

I was telling – I mentioned earlier, Taste Elevation, Easy Meals, growth platforms continue to do well. In fact, together, they’re actually now growing share again. And if you look at our business that have had services like business like Philadelphia cream cheese, we’re actually seeing the improvement sequentially even as we go into this last month. And dawning today, end of the year, this will be the first time we’ll be able to promote Philadelphia cream cheese in the last four years, so we just haven’t been able to truly unleash the power of that brand because of some service challenges that we’ve had in the past. So we see those things sequentially improving.

The other brand that is part of our growth business is our Lunchables business. And as we speak right now, Andrew, we are seeing expansion of phasings in some of our key customers that are resetting their shelf to increase – some around 40% of our shelving as we continue to bring the right assortment to consumers and customers. So those are things that you’ll see sequentially improving. We’re also going to see improvement because we’re going to be cycling some of that pricing as well. That is going to be improving as well as we go towards the end of the year. And in fact, our share from the low in April of this year already have seen improvements as we go into August.

The other thing I’ll add is that we entirely focus on launching the meals in track channel. We’re also seeing growth in non-track channel. That is some of our 12 businesses that are on track, whether that is in our dollar store than non-track, which we have expanded our distribution in order to better service our consumer. As we know consumers, are making choices right now, not only with the type of products they’re using in the type of format in which they’re using but also in the channels in which they are going. So that, just take you sometime, I’ll give you the full story of what’s happening to the business because of also those non-track channels as well.

I think the challenge that we have continues to be in us staying focused on our discipline on places like Oscar Mayer. That is something that may be more of a short-term situation until we truly can leverage opportunity in Oscar Mayer for a long-term. The reason that one is particularly – is a little bit challenging normally because of the pricing of our competition. But also, what we are seeing is some of the growth that we’re seeing in the category is more in the low-end type of products. And today, we’re still servicing that in the low 90s, so there is an opportunity on service improvement in the low end of our products and more value method products than Oscar Mayer that we’ll see that much improve by the end of the year.

Andrew Lazar

Okay. Maybe we switch gears a little bit over to some of the remaining pillars of growth like Foodservice and emerging markets. I guess, previously, Foodservice was seen as sort of just another channel to sell your items in. Obviously, KHC has become much more a Foodservice, become much more of a strategic focus for you. Maybe you could talk a little bit about this pivot and why you view the Foodservice channel as critical?

Carlos Abrams-Rivera

Because we want to…

Miguel Patricio

No. It’s so critical, first, because for the market, for the industry, about 18% to 25% of the industry is back of the house, which basically, you’re going to have your brands and margins are much lower. For us, that’s very different. It’s 50-50. We have 50% of our business is front of the house. Basically, when you go to a restaurant, there’s a bottle of ketchup in front of you, and that is why it’s so critical because you are teaching consumers the taste of your brand. That is important. Everybody in the globe and especially in countries where we are expanding, like, with markets where we are teaching consumers the taste of ketchup, the taste of mustard, the taste of mayo, and that is why we like this channel so much. It also rose 50% faster than retail.

And you are right. I mean in the past, Andrew, it was a very transactional type of relationship. We would sell packs of ketchup. Today, that’s very different. I mean, we have a very good team who changed radically the talent that we had. And we made it an engine for growth. It’s critical for our success, and we’re continuing bullish on it.

Carlos Abrams-Rivera

I mean, listen, just to compliment to Miguel’s point. This is an area where it truly can unlock a number of things for us. First of all, it can be a place that actually drives a lot of innovation. And we’re seeing that not only here in the U.S., but in emerging markets. In Brazil, for example, we have partnerships with some more top burger chains in order for us to understand what these consumers kind of be looking for, we take the best products and actually will bring it into retail. That formula of ours, looking at the Foodservice channel as a place of driving insights and innovation is something that we’re just starting to see the potential it can do for us.

We also – it’s a place that we are continue to invest in terms of bringing innovation solutions to consumers. I think over the last six months, we talked about bringing a new to the word idea of Heinz Remix. We created around 200 different sauces in one machine. It allows us to get data on what consumers are actually choosing to make their sauces that they would then use as another way for us to bring innovation into retail. At the same time, we also know that when we go to emerging markets, a great way that Miguel said for us to expand the potential of our brands if I make sure that we’re in the right channels in Foodservice. That allows us to create that kind of demand from consumers so we continue to grow the retail side of the business as well. For us, that – we’re just starting of how big this potential could be as an area in which we have now been able to grow share, expand margins and simplify the business.

The last thing I will say, Andrew, is that part of that bring focus in our Foodservice business has been helpful to us making sure that we expect about the channels in which we’re going to grow. So we have shifted from channels in the past [letting them go to] waste, whether that was us creating a different kind of product, very much customized to smaller restaurants to now making sure we have – if I have a portfolio, we’re reducing the number of SKUs by 50% since 2019 and then going into new channels where that is taking Lunchables to schools, whether it’s having partnership with hospitals so that we can have stronger relationship with fewer channels that we can then expand our margins in those channels.

Andrew Lazar

You’ve also changed your go-to-market strategy in emerging markets pretty radically. I mean, historically, it was more of a land grab. And now, it’s a much more focused and disciplined sort of approach. Can you talk a little bit about that pivot in strategy in emerging markets? And so what you’re seeing some of the earlier returns?

Miguel Patricio

Yes. Emerging markets, it’s another critical part of our strategy. And first, because they grow faster than non-emerging markets, but also because 60% of our portfolio is Taste Elevation and really, with Heinz brand leading it. Heinz brand is one of these unique brands in the world that’s although our footprint is really not global, we have a global recognition for the brand. So even in countries where we basically do not distribute Heinz, might as well speak of one, Colombia or Ecuador, the brand has a very, very, very high awareness and also consideration. And that exists, I think, in part because of the American influence culture, because of Hollywood, because of our presence in front of the house, and then – which is incredible. I mean then – so we need to grow our footprint around the world. The chance is that it is there for us to grab.

We recently announced a partnership with Anheuser-Busch, which we are taking very seriously and very closely, and it’s is working well because that will be a model for us to take our products and our brands to countries where we still do not have really a presence. And if that works and if we can scale, then we can build operations in those countries. So yes, we see today a bunch of markets in a very different way. And again, far less transactional, only selling or grabbing, but really strategically on how we’re going to build our business from potential places and really, from the Heinz brand.

Carlos Abrams-Rivera

And for us, leading the way is Latin America. I mean, it’s a business in a place that many of us worked at and understand very well, and we are seeing how we are growing margins as well. And I think that you see where we have developed this market that we model, which we know how do we actually start working with Foodservice to create the demand. And invest behind the right distributor partners in order to grow the business and then come back and actually invest in the SG&A in order for us to lever distribution in the country.

We see the model that started in Brazil. We have expected Chile, and we have still so much opportunity in Latin America. And I would tell you that they make a little way for us in emerging markets. Now, our Middle East and Eastern Europe businesses are also [indiscernible]. So it is technically for us that we’re on the discussion the start off for where it could be. They feel very comfortable because we have a model that we know can work and can travel.

Andre Maciel

We also unveiled some new or big idea innovation tagging about February. HomeBake and Crisp from the Microwave for cheese. It’s still a little early, but are we seeing there in terms of early…

Carlos Abrams-Rivera

And I think for us, the – our continued transformation is going to be written through the innovation, and I’m very excited about what we’re seeing because we approach this in terms of new ways, Andrew, I think one is, how do we take our brands and bring it into new spaces that until now, we have only dreamed of? We have Kraft Mac & Cheese, and now we’re launching Kraft Mac & Cheese in the frozen aisle and it is doing spectacularly well.

We are now – we have had Lunchables over 30 years. We are now moving – taking Lunchables and bringing it to Canada as a way for us to drive kind of expansion into new marketplace with a brand that we know. So this idea of us kind of leveraging our brands and bringing to new companies, new locations is a way for us to drive the innovation in a very distinct way.

We’ll also focus on driving this [indiscernible] platform. And I’ll give you – the best example for me is the Crisp from the Microwave. It is an innovative technology that we have patents behind that allows us to make sure we take out of the microwave something that will taste like you have grilled it. The first foray to that will be this year, with Crisp from the Microwave on the grilled cheese, and you’ll be able to take it out the microwave actually put it in the stove in order to heat that. So even is a way for us to take that technology, leveraging across an entire number of brands in order to create that scale to that innovation as well.

And you’re seeing that, as I mentioned earlier, about our profit business and this idea going from restaurant retail. What we have done with IHOP is another example of us bringing innovation in a whole different way of thinking for us to continue to build the business as we go forward. We’re very excited with what’s to come, and you’ll see a lot more from us as we go into 2024.

Andrew Lazar

Maybe in the last minute or two, I guess, what’s the company’s propensity for M&A at this stage? And sort of what current assets you’re looking for over the last couple have been more American market Foodservice sort of oriented. Is that kind of where the food is slightly still be going forward? Or are there some other things you can even in U.S. retail?

Miguel Patricio

Well, absolutely. I have truly believed that – in fruit more than any other type of CPT, M&A is critical. And it’s critical because consumer needs changing in much faster way. I mean, the way that today is very different the way we were eight years ago. And as a consequence, you always have to think about what’s going to be the new growing category and what’s going to be the new defining category, and be fast on [indiscernible]. And so the answer to you, Andrew, is yes, we are working on both sides of opportunity. We made four small acquisitions in the last 18 months, and it’s not a coincidence that four out of the four. It’s not a coincidence that sitting out of the four in markets and whereas in foodservice. So yes, you should expect more about that, more from that.

Andrew Lazar

All right. Well, we’re out of time here. We’ve got a lot more we can cover. I want to get into productivity as well. Why don’t we do that in the breakout? And please join me in thanking Kraft Heinz for being here today.