Mondelez International, Inc. (MDLZ) CEO Dirk Van de Put Presents at Deutsche Bank Global Consumer Conference

Jun. 14, 2022 2:33 PM ETMondelez International, Inc. (MDLZ)
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Mondelez International, Inc. (NASDAQ:MDLZ) Deutsche Bank Global Consumer Conference June 14, 2022 6:00 AM ET

Company Participants

Dirk Van de Put - Chairman and Chief Executive Officer

Vince Gruber - Executive Vice President and President, Mondelez Europe

Luca Zaramella - Chief Financial Officer

Conference Call Participants

Stephen Powers - Head of US Consumer Packaged Goods Research, Deutsche Bank

Stephen Powers

Well, thank you all. For the next session, we welcome Mondelez to the stage. Joining us today are Dirk Van de Put, the Chairman and Chief Executive Officer of Mondelez; Luca Zaramella, Mondelez’s Chief Financial Officer; as well as Vince Gruber, who heads up Europe as its -- as its President. So thank you all three gentlemen for being here, very happy that we're going to run the session exclusively through Q&A. And again thank you for your participation and your answers in advance.

I guess, let's just start very broadly, if we could -- needless to say there has been a tremendous amount of change that’s spaced everybody at the conference, every company of the conference. But it came at a time when you were changing and re-prioritizing and evolving the strategy of Mondelez. As you think back on the last few years, I guess how would you take away the greatest accomplishments and I say that in a -- with a -- with an eye towards what will enable you to navigate what is likely to be an increasingly volatile time going forward as well?

Dirk Van de Put

Yes. Well -- from probably the highest level we were up to 2017, and after we had sold the coffee business, we were very focused on our margins. We were a cost-oriented business, because we realized that our margins weren't as high as they should be. As I came in and Irene retired, the big question was can we make a pivot towards growth and can we become a growth company and I would say the biggest achievement is that we achieve that.

Stephen Powers

Yes.

Dirk Van de Put

So our growth has been 4.2% top line for the last four years. At the same time, we also wanted to revamp our focus on our brands and our categories. So we've done a lot of work on rebuilding our global brands or strengthening our global brands. But we also -- we are a house of many brands, I would say. We have 55% of our portfolio, which is local brands, which had been neglected a little bit before. So we have been revamping those and investing more and they have reacted really well. I think that's a big achievement, and if you ask me what's going to lead to the future. I think the fact that we've been building up and every year increasing our investment in our brands is going to help us well in the coming years.

The other thing and I would probably maybe some of the investments we've done, but during the pandemic, the consumer started to live more from home and our categories, which are mainly biscuits and chocolate have benefited from that. So our categories, which were biscuits and chocolate particularly, which were around the 3% to 4% growth got lifted up to a 6% growth. We have other categories like gum that got negatively affected, but I still see at the moment that momentum in those categories. We clearly see a change in the attitude of consumers where snacking every year is becoming more important.

Millennials and Generation Z particularly like to eat in between meals, and they don't think in sit-down meals, but while before the pandemic, there was a big movement towards healthier snacking. What the pandemic has also brought to bear is that indulgent snacking has become more and more important. And so 83% of consumers don't think there's anything wrong with having an indulging snack or several a day. And so I think that bodes well. So, the investment we've done plus the changed attitude of the consumer, plus our strengthening of our brands, those altogether I think positions us really well for the years to come.

Stephen Powers

Great. Within snacking categories, biscuits, chocolates and increasingly cakes and pastries and choco-bakery are where you're most focused. I guess maybe some perspective on how you size the overall opportunity in those categories and the key areas of strength, competitive advantage that Mondelez has and maybe Vince you can pile on and Dirk from a global perspective and then Vince, we're in your large -- we're in Mondelez's largest market, would love your perspective on how it applies here.

Dirk Van de Put

Well. First of all, there’s our strength in those categories. We are -- I would say, by far the leader in biscuits globally, probably 5 times the size of the next competitor. And in chocolate we are number two, but with more momentum than the number one. So I would dare to predict that we will become the leader in chocolate. I've talked about how those categories have accelerated and for us to be the world leaders in those, that's going to -- that I think is a competitive strength. We are a very global company, more than 75% of our business is outside of North America, in fact Europe, and Vince will certainly talk a little bit about that is our biggest market.

But at the same time we are present in all the major markets around the world and doing quite well. That combination of global and local brands, I think, I would also see as a strength. If you go to Belgium where I'm from, we have Cote d'Or. But if you go to Sweden, we have Marabou, you go to the U.K. we’ve Cadbury. So, we have the strong local brands also, plus we have that range of biscuit products that really helps us. I think the fact that we have had a cost period behind us and our margins are solid, we are a very cost-focused company. We haven't lost that. We went on a diet and we're staying -- we are certainly keeping the weight off. I think that also is going to be one of our competitive advantages as we go forward.

The other thing we've recently seen is that the pricing power is there. We've increased our prices, but so far, our volumes have not suffered, if anything, they have accelerated. So that I think is also one of our strengths. I'll stop there and let Vince start a little.

Vince Gruber

Yes. I mean, if I start with the categories for us, I think if you look at chocolate in Europe to Dirk's point, I think we have the signature taste in pretty much every, every country where chocolate we are playing. If you take Cadbury in U.K., is the number one, not just by number, but also by love, consumer, that's the taste of the nation. We have the same Milka in Germany, you have the Cote d'Or in Belgium, we have the Lacta in Greece. So those are really assets and the reason why I'm saying that one, it's important because it's a model, which then can work beyond chocolate itself and to bridge into biscuit. We have created over the last couple of years in Europe in particular a segment on its own, that is called chocobakery, chocobiscuit, where we took our chocolate brands into that other category, which is a different occasion, different moment in the day, consumers are using.

So, if you think about the latest acquisition we have done with Chipita, which gives us the entry point into the baked snacks or then into the consumer business, which again you can imagine the business there is already great and strong in the Eastern European part, but if you bring it to other markets, we will bring the chocopastry in that territory again. So I think what we have is a great model which goes across categories. Each of these categories are different occasions in moments of consumer's time. So they're very accretive in that sense.

And I think the investments over the last year, we have done in those in brands in general, the biscuit and chocolate has grown those brand year-over-year into an element where today they stand for chocolate and biscuit, but also for segments left and right. So the accretiveness of our segments and territories we go is just -- has just proven over time.

Stephen Powers

How -- I think there's been a lot of investor confusion to some extent, but the move into cakes and pastries and chocobakery. How big is that opportunity for Mondelez? And how do you exploit that opportunity without diluting the core focus?

Dirk Van de Put

Yes. I think when you use the word cakes and pastries, people can have different ideas of what that means, but the way to think about it -- that we see it is then, if you are a consumer these days, and you walk through the aisles in a supermarket, you might find yourselves in what you think is a biscuit section, but it's a soft cake section and it’s the same brands that play there and the shelves are right next to each other, and so it's an extension of the biscuit shelf. It's usually portion size, it's not big cakes or so on.

And I think the other thing that is important is there is an opportunity to consolidate this area to bring real branding, quality product through this area. In general those products sell at a higher price point with higher dollar margins and it's a size that is very close to the biscuit market size. We are almost doubling the opportunity that we have. As Vince was explaining we have proven that our brands can play on both sides and the growth is similar to biscuit. So, that's the way to think about it. You probably all have had already a Milka Cake or Cadbury Pastry. So it's a continuation of a universe of the market, that's the way to think about it.

Vince can maybe talk a little bit about what that means in Europe, the opportunity that we have there and how you want to tap into that.

Vince Gruber

If I look at the two markets, the cake and pastry category segment is literally in Europe doubling our operating space, so biscuit is around $18 billion, $19 billion in Europe and this cake and pastries another -- adding another $17 billion, $18 billion space for us to grow. And to Dirk's point, it’s not that new to us. I think in particular on the mini cake part, we're already playing quite successful for years now in the market. So, it's the pastry partner with Chipita, which comes on top of them. And so it's doubling our playground, you know, from biscuit into the cake and pasty product and is giving us new footfall into those markets.

Important element is that these are accretive, because from a consumer point of view, those are tapping into different occasions in the day. Pastry is more -- croissant is more in the mid-morning, a cake is more in the afternoon, a soft cake and chocolate is in the middle or more in the evening. So I think what it does for us, it's an accretive high incremental play. It's not so much tapping on each other and at the same time to my earlier point, the chocolate, you can leverage to synergies in terms of taste, sensation and value creation, because everything we bring to the market is a value accretive element for the retailers and for us.

Stephen Powers

Okay. At your most recent Investor Day, there was a couple of other points of accretive growth opportunity you laid out in chocolate, more strength in seasonals and sharing, specifically the brand -- a brand like Toblerone as a focus for growth. And then across both biscuits and chocolate, you highlighted historical geographic imbalance, some markets are strong in chocolate not so strong in biscuits and vice versa. What's the aggregate opportunity there? And how quickly do we -- do you expect to make tangible progress there? So us as investors can actually measure success.

Dirk Van de Put

Yes. The aggregate opportunities is quite big. It's -- I can probably hand or count on two hands the markets where we are, the number one or two in chocolate and the number one or two in biscuits, while globally, we are, as I was explaining, if you go individually market by market, think about us in the U.S. we are a biscuit player. Think about us in the U.K., we are a chocolate player, we're a smaller biscuit players still opportunity there. As you go around the world like that, and you have this situation. It goes without saying if you already have a presence, you know the trade that it is easier to develop a second category. We have the brands, we have the knowledge, we should be focusing very strongly on building up that strength next to it.

The opportunity, maybe Oreo is an example. So Oreo at this stage is 60% of its businesses in the U.S. and China. But we think that we can grow Oreo by $1 billion every three years, it's getting close to a $4 billion brand. And that growth is largely coming from markets where we already have a presence on chocolate or in biscuits. But where we're using our local knowledge, our local plants to start producing and selling Oreo. So, we now have several markets where Oreo is approaching $100 million. India would be one, Mexico would be another market. And in those markets like U.S. and China, Oreo captures about 10% of the biscuit market.

If you start to imagine that we could do that in most biscuits markets of the world and I see no reason why, Oreo, which is the world's most popular cookie, why we would not over time could make that happen. That gives you an idea of the size and speeds we can make that happen. So, I think it's going to be substantial for our growth. If we then can complement that sometimes with local acquisition, then that could really accelerate things in a major way.

Stephen Powers

And so I guess that brings the -- brings up portfolio reshaping, which has been very important over the recent timeline of Mondelez as clearly important as we go forward. I guess, maybe put it, maybe let you explain like what is the -- what are the major improvements you've made in the portfolio. How important has portfolio reshaping been to your aspired growth algorithm? And should we expect you to remain as active as you have been going forward in a constant pursuit of an optimized portfolio?

Dirk Van de Put

Maybe Luca wants to talk about that.

Luca Zaramella

Sure. We see the portfolio reshaping as a true strategic enabler for us. It is not necessary to achieve the algorithm that we disclosed at the last Investor Day, but it will be accretive and acceleration of that algorithm. Today, we are in a position where within the coffee stakes that we have, potential opportunities that we have by exiting some parts of our portfolio and on the other side by making acquisitions, we can really change the shape, not only of the P&L, but also of our cash flow. Particularly, as you think about Chipita just few numbers, it is $600 million, $700 million platform, it is a platform that grows in excess of 3 points, 4 points, compared to the average growth of the company. It is an acquisition that we funded through debt that we acquired in Europe at zero cost pretty much and it is going to be accretive in a meaningful way already next year.

So it is top line accretive, it is zero cost of capital pretty much to us. And it is something that is value accretive, you fast forward and you do a series of these acquisitions and we have done a few already, obviously the Mexico acquisition of Ricolino, it’s another one, very excited about, because it is an accelerator for the ability we have to establish Oreo even more in that country. In that country, we have 5% share of market of biscuit, with the acquisition of Ricolino, we can push that number up. We can also establish a presence in chocolate. So acquisition for us given the opportunity we have through coffee, some divestitures and with these acquisitions can lead to a place that is very accretive even to the algorithm we disclosed at the Investor Day.

Stephen Powers

And taking Mexico as an example, how quickly can you make good on that opportunity, is that something we can see output on in ‘23 or is it going to take more time?

Luca Zaramella

I think you already see it quite frankly if you look at the impact of what we call the ventures in the North American segment, [indiscernible] Tate’s, Perfect Snacks, Give & Go et cetera. It is already quite accretive to the top and bottom line. And so as you think about Tate’s, the ability we have to put that brand on a distribution system like DSD, it resulted in material share gains in the U.S. I think Tate’s over the last three years in the U.S. is most likely, if not the top, the second brand in terms of share gains. And so they are coming to fruition, obviously we need to stay tuned, there is quite a bit in the pipeline at the moment, we have been establishing connections with a lot of potential targets and hopefully there is more to come.

But I would say that as of next year, you're going to see the impact of the acquisition of Chipita on the bottom line and obviously top line, it will be the first year of organic sales growth. Ricolino, I'm very excited in size terms, it is the same of Chipita and so these things will compound over time by the fact that we will be exiting developed market gums and holes. You're going to see even better benefits on the top line going forward.

Stephen Powers

Great. On those divestitures, maybe you could just expand a bit more on what the divestment criteria were or are when you get into non-core assets? And also how you're thinking about utilizing non-core assets like remaining stakes in KDP and JDEP to fund the portfolio optimization?

Dirk Van de Put

When you dissect the growth of Mondelez and you’re not privy to category P&Ls, but obviously we are -- you really realize that as you look at chocolate and biscuits that are pretty much 80% of the portfolio. Those two categories have been delivering stunning top line growth, share growth over the last few years and certainly double-digit EBIT growth. And the merit of the company that is more focused in these two categories, and by the way, it can add to adjacent categories, namely bars and baked snacks that are even more accretive in terms of growth and where we have the right to play and where margins are good. You can have in your mind the picture that is really a high growth, high earnings type of company and that's really the ambition we have.

We want to use those other categories that are pretty much 20% of the portfolio and obviously haven't grown as fast and have been dragging us down quite frankly as the way to establish an even more predominant presence in chocolate and biscuits. And between those and the coffee assets, the goal is very clear, it is just a matter of clearly a bit of time making sure that we base ourselves both on the way in and on the way out. And so we want really to be thoughtful in the way we exit some of those categories, necessarily -- not necessarily by the time we have something, but by optimizing the absolute value of those assets as well. So it is a value component that we have in mind. It is clearly the fact that we want to manage stranded costs. It is the fact that those will provide the firepower for more acquisitions.

Stephen Powers

Okay. And if we think about the here and now, right. So if we think about where we are in calendar '22. Dirk you alluded to pricing and pricing power to-date. Should investors be more concerned about negative elasticity in your categories going forward? How do we think about your business holding up against the more uncertain and potentially deteriorating consumer environment, whether it's in Europe or the U.S. or globally?

Dirk Van de Put

Yes. Maybe a number of data points or observations. First of all, history says that during recessions our categories do quite well, they're limited out of pocket, they are kind of a comfort type of categories, related to the kids and so on and so on. There’s many reasons why biscuits and chocolate during recession are not that heavily affected and in fact we've seen biscuits sometimes accelerate during recession, so that's one data point.

The second one is the overall elasticity of what's going on. So we know that if the elasticity or the relative price points within a category don't change, then elasticity is more limited and that's one of the reasons why we see limited elasticity, because everybody is moving up in the category. The second consideration is if the consumer compares to other categories, is this particular category i.e., biscuits and chocolate getting more expensive versus those other categories. At the moment that's not the case, if anything, maybe even a little bit more affordable.

And the third one is, are we reaching price points where the consumer starts to say, now this is too much. We do know that the consumer at the moment is high savings, spends less on clothes, spends less on eating out, spends less on travel. And on top in emerging markets as a little bit of the relief of -- through the pandemic that all leads to a consumer that is prepared to spend and is prepared to spend on the grocery baskets i.e., biscuits and chocolate. So today snapshot things are really good and price increases have passed and have had compared to the trend that we had before really have no effect. Now, is that going to last?

I wish I could tell you that, but I don't, what I do know is that we are doing everything that's in our power to prepare for potentially a consumer that reacts. We every year have increased investment in our brands. We're doing that this year, and we're planning to continue to do that and if need to we would increase even more, because I don't think you can increase prices and cut the investment.

At the same time, we are doubling down on our cost focus and making sure that there’s some benefit to be had as it relates to costs. And then as it relates to pricing, you need to be clever in the way you do pricing. There’s a number of techniques, in general described as RGM, revenue growth management, that will play a role. But the situation is so serious cost-wise that you need to go really with least price increases at the moment. And so that has been going well. I would say if you look at our cost picture, we are largely 85% covered for the year.

I would say apart from some round of pricing that's going on in Europe at the moment, we are getting there for the year. So for this year I would feel relatively comfortable and we are making sure that we enter the next year with some momentum from a pricing perspective and that we have some coverage already into next year.

I mean for the rest, it's really -- we will have to react to what the situation is and make sure that consumers keep on considering our categories. But the underlying trends, consumer snack more, indulgence is on the rise, they are very attached to our brands, who sometimes are playing an emotional role. Oreo is the most popular food brands with Millennials and Generation Z and so on. I think all the momentum is there to assume that considering all things that could go on that we should be doing well in these circumstances.

Stephen Powers

Luca from a cost perspective, have the underpinning assumptions that you laid out exiting the first quarter evolved at all or changed at all over the last three months, are you seeing more cost pressure, if so where? And as Dirk alluded to, you guys weren’t -- it seems like you still are pretty intentional about your efforts to price ahead of inflation you can see into 2023. Is there anything in the environment you've seen over the last three months that has made you a bit more cautious on that pricing stance?

Luca Zaramella

As we just said, we are fairly well covered for 2022. So in terms of incremental cost into 2022, the impact has not been material, but the dislocation of certain commodities and some packaging and ingredient costs that we saw after the market reacted to the Ukraine-Russia war has resulted in additional costs for us. Particularly into 2023 as we run out of coverage into next year. I think as I said during the earnings call, we see inflation this year on the total COGS line that is low double-digits, which is a way to say round about 12% give or take, at this point in time. We see in absolute terms, into next year of the same type of inflation.

Now, what we have been developing is clearly a pricing plan that is fairly comprehensive. I think it touches pretty much every single country around the world and there are situation where very limited where we priced only once and we are okay. There are situation where we have already priced a couple of times. There are situations where we are about to price for the third time in certain markets. So, as you think into next year, fair to say that the absolute dollar inflation is going to be round about the same as this year at this point in time based on the current spot rate, but one of the benefit is that by having priced in second quarter, third and fourth, we will have a carryover impact into next year.

And so the pricing incremental pricing that we are going to see in [Technical Difficulty] the important part for all of us in the company is continue to invest in the franchises, continue to invest in quality of the products, because there might be a temporary dislocation due to elasticity, there might be a little bit more severe than the very positive benefits we have seen so far, but reality is after that temporary dislocation our categories are poised to grow in our brands within the categories are even more higher growth than the category themselves.

Stephen Powers

That’s what I’m going to ask. Is there any place in the organization or in the P&L, where you've made the choice to defer investments or are strategic investments around advertising and brand building and capabilities enhancement R&D, are those all full speed ahead?

Dirk Van de Put

Yes. There is no place where of materiality. Clearly, if there are situations where we don't have the products, we tend to look into -- does it make sense to advertise. But the overwhelming answer is independently from the market, independently from global and local brands, independently from chocolate or biscuits we are investing and going forward. In terms of capacity, we are putting down capacity around Milka, Cadbury and Oreo specifically. So, proven capacity platforms and the other one where we are putting down capacity it is Give & Go, which is a tremendous platform again, $600 million, $700 million of revenue growing high single-digit, if not double-digit, where as part of the synergy play that we had -- we identified some capital expenditure, so full steam ahead.

Stephen Powers

Okay, great. A couple more questions on the current environment and the uncertainties ahead of us. You talked about not being able to break the future, which I think is fully understandable. When you think about and weigh concerns on consumer demand in the U.S. versus in Europe versus in emerging markets. How do you rank order the relative concerns? Is it developed market focused? Is it -- I think that's the market concerned, we have -- emerging markets are not front and center in the dialog, although they are critically important to your business? So how do you think about the range of probabilities out there and where you're most cautious?

Luca Zaramella

At this stage, I would probably see Europe has the more doubtful consumer situation driven by the fact that we will see the inflation, driven by the fact that historically the European consumer is a little bit more susceptible to negative feelings plus there is a whole issue of the war that is hanging as a cloud. So -- and the discussions with the retailers on pricing are always a little bit more difficult in Europe. I would say the U.S. consumer has surprised me, because if you look at pricing situation from our perspective, we’ve priced already much more in the U.S. than in Europe, and the reaction has been very limited so far. So, a lot of resiliency from the U.S. consumer. I think driven also by the fact that U.S. consumer for all the reasons that I mentioned before is feeling pretty good as it relates to biscuits and chocolate.

Emerging markets is a bit of a enigma at the moment where we are seeing stronger growth than what we've seen in recent past. So we've increased prices, particularly in Latin America quite significantly. But volume growth is very strong. And we chart it down to the fact that consumer has saved money, feeling good about the pandemic and they are, kind of, living their life like they want to live it. In India and China, inflation pressure is less [Technical Difficulty].

Vince Gruber

Second wave now at the moment, but I think the conversation with the retailers is on one side is definitely also not just the pricing side, but is how is that impacting the consumption going forward.

And I think what we do is kind of we will go forward with the retailers to get another -- the pricing action, but also then to invest in the brands going forward. And so, what gives me confident in our categories in particular, if you look at the -- also better learning in COVID, different moment, but I think consumer behavior might not be so much different. A, we have very resilient categories in chocolate and biscuit itself. B, people have been very much hanging on the brands they love and like. If you look at our portfolio, we are very much, call it all family fitting and kind of not the super high-end portfolio kind of all family fitting portfolio which is also driving a lot of consumption.

The third thing is I think the in-home consumption, where we will have a revival in that sense, because we go less out and so I think from a consumption point of view, there are some indicators where I think we feel good and being relatively well set on the whole thing and as to Dirk's and Luca's point before, we will not step back any investment in the brands and into the markets as we go forward.

Dirk Van de Put

Great. Another topic that's been top of mind for investors related to you, especially as I've travelled around Europe last couple of weeks has been HFSS in the U.K. Maybe just a little bit perspective on that from where you stand and what you're doing, what the company is doing in the U.K. specifically to get ahead of that.

Vince Gruber

Yes. I think one little change came up in the last couple of weeks with the government said, okay one certain parts of the original regulation comes a year later. But yes, the location in-store will change by October going forward. What we have done this pretty much with every major retailer in U.K. have been working on what is the -- our reading, what is our assumption, behavior and what are the other tests and learns we can take. So each of the retailers have done, actually in partnership with us, tests and learns in different placement in store to see how the offtake is. If you ask me what most likely we will see going forward, I think we will see one shelf, the main shelf will remain the key destination for consumers when it comes to chocolate. So that is not changing or the people know where chocolate sit and will still be there. So there is kind of our approach is how to brand that thing, how to make the brand more stand out of their shelf ever -- more than ever before.

Second when it comes to promotional, I think each of the customers and retailers are planning for dedicated call it promo or power aisles as they call them, where the promotion will take place, because it's still, you're allowed to do the promotional element is just different places are not anymore open or just not open. So, we will be promo aisles more than today you find in store, which allows to place the category and the products there.

And thirdly, I think which is quite important for retailers and for us is the seasonal business itself, Christmas and Easter as the main season. There you sense a very high interest from retailer point of view, also to create you still have Christmas in store. It's something when people enter -- consumers enter, it has to happen. So instead of doing it front of store, it will be beyond and it will be in the store at a different place, but it's a high interest and high collaboration, in particular in U.K. with us, given the position we have to make the season big again.

Stephen Powers

And so the net of that do you feel like it's an adjustment period for the consumer and demand that lasts months before finding kind of a new normal or resume normal under different circumstances or is it going to take the category longer to normalize?

Vince Gruber

I think it will take a bit time, because I think what people will see and you could see in the main aisle or the main where people go is a bit less visibility, because that's the intent behind. But I think people and we have seen that when consumers do have as much as we say, it's a spontaneous buy up, but chocolate and biscuit is something people want and like. So they will the shop, they will see the season, and they will get the promotional attractiveness by that what retailers and we will do. They might need to find a new way new or new kind of course in the stores to get there, but I do expect that will be kind of, an adaption phase for the category. I think our position and our share there would, let me assume that we will not miss on the share gain, miss on category again. So, it would be different adaptation but not a major one.

Stephen Powers

Yes, great. We’re just about out of time. And covered a lot, of all the strategic initiatives and imperatives that you have before you and before the company, are there one or two that you would highlight as most important where you think you can make tangible progress on over the next six to 12 months, whereas if we reconvene here in a year, we're able to give an A plus report out?

Dirk Van de Put

Yes. I think the -- what we've done over the last three years is kind of execute really well and grow the core of our business. I don't see that changing and in fact, we believe we can accelerate the growth of our core business -- all the core of our business. So I think that would be a good report card seeing the fact that we are in the middle of inflation and pricing and so if we can come back and show that our categories have continued to grow and that we have been the winner in our categories, that would be a major step forward and when I say growth, I mean volume growth in all the categories.

I think the other one is that our geographical footprint as we go around the world and as we are trying to be stronger should change significantly, maybe not in the next 12 months, but give us 24 months, there should be a significant change happening and you will see some of those portfolio changes that we have been talking about.

Stephen Powers

Very good.

Dirk Van de Put

Those would be the big three.

Stephen Powers

Big three. Okay, thank you very much. Thank you all for joining us.

Dirk Van de Put

Thank you.

Vince Gruber

Thank you.

Question-and-Answer Session

Q -

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