So I think that the number of cactuses that we have increases. Since the quarter one, we see good momentum as we move forward on the relationship with the retailers and the hard work that our wholesalers do. So we want to continue to call back this share position, make the right choices and investments for next year so we minimize any resets coming out of the spring reset. But as I always say on the three-tier system, the retailers are independent, they make their own choices, and their choices are made based on the losses, rate of sales and the belief that they have and the brands that will drive the category. Thank you for the question.
Fernando Tennenbaum: Hi, Rob, Fernando here. On your question, I wouldn’t look buyback on any specific action in isolation. If you zoom out, we continue to drive more resources to the leverage. It’s a $3 billion tender offer and 1 billion share buyback. But if you zoom out even further, this is a function of the business that we have. We are in a large and growing category. We have our leadership advantage, which is our unparalleled footprint and scale. We have the replicable growth drivers that iconic mega brands and digital products, and we have the superior profitability. It’s pretty much our margins on cash flow. When you get all of that and get this to move and continue to deliver growth, we continue to generate cash, and then we need to allocate cash in a way that creates more value to shareholders, and that’s the dynamic allocation of our capital.
And the $3 billion cash tender and 1 billion share buyback, just a reflection of our business performance and the choices that we have to maximize value to our shareholders.
Rob Ottenstein: Thank you.
Operator: Thank you. Our next question is coming from the line of Mitch Collett with Deutsche Bank. Please proceed with your question.
Mitch Collett: Hi, Michel. Hi, Fernando. It’s Mitch Collett from Deutsche Bank here. I’ve got one question, please. You had a big recovery in your EBITDA margin in South America and primarily by Brazil. But can you talk about the drivers of that expansion? Clearly, there was a big benefit at the gross margin level from pricing above COGS inflation. But did these help at all, perhaps in terms of managing SG&A or maximizing your revenue per unit? Thank you.
Michel Doukeris: Hi, Mitch, I think that we also referred to this point in a couple of the calls that we had before, where we clearly made the separation between what our structural issues in relation to our margins versus what was a consequence of commodity inflation and FX. And it’s very clear for us that structurally, we don’t have any impact on our margins, but we have a lot of impact from commodities and FX. And we also highlighted that because of specifics in terms of sourcing, hedging, currencies, some of our markets got earlier into this margin compression, and some of the markets later. And therefore, the phasing out, we also not to be uniform. And when you think about what’s happening in Latin America and especially in Brazil, we see great performance from our mega brands.
So they are growing, driving growth both in power and in share. We are well positioned with the scale that we have and efficiencies, so operating very efficiently in the overhead. And as we see now commodities normalizing and FX a little bit more in our direction, the margins are rebuilding. Of course, part of our operating model now contemplates BEES, which enabled us to reduce cost to serve, enlarge our distribution scale and is also helping us to manage better the campaigns and the promotions that we do, integrating online and off-line. You combine this with a very good portfolio that we have today in Brazil, market structure that looks much better than it used to be in the past, so competitors competing more at the top, more premiumizing the market and the portfolio.
And now with operating efficiencies, we are glad to see that this is converting into margins. It’s all combined as it goes in Brazil and Latin America, and we saw together the same effects in Latin America when we were together in Mexico. So it’s moving in the right direction.
Operator: Thank you. Our next question is coming from the line of Simon Hales with Citi. Please proceed with your question.
Simon Hales: Thank you. Hi, Michel. Hi, Fernando. So two for me, please. The first one is with you around your marketing and sales investments as we go through the end of the year. Is it fair to assume that the rate of SG&A growth that we’re going to see in the business into the fourth quarter will probably begin to slow versus what we’ve now seen in recent quarters as you lap that World Cup spend unwinding Q4-on-Q4? Or should we still expect enough weighting of investment elsewhere in the business and not least your ongoing commitment to wholesaler support in the U.S. to maybe sort of offset some of that sort of theoretical Q4-on-Q4 benefits? So that’s my first question. And then just secondly, just I suppose just a point of clarification with regards to the share buyback. Can you start executing that immediately, Fernando? Or do you still need to appoint a bank to handle the process and go through some other approvals before you’ll actually be in the market?
Michel Doukeris: Good morning, Simon. Maybe I’ll take a shot on the first one, and I’ll leave Fernando to complement the buyback. So you know that we give the guidance on the EBITDA line, the fourth way as a way to simplify our conversations and making sure that we have both like the freedom and commitment to invest to the long-term while the financial discipline to deliver profitable growth over time. So I don’t think that it makes any sense for us to give too many details or guide for where the sales and marketing will be on the quarter four or quarter one, quarter two next year. This is all built into our overall outlook for the year. But you have one point that’s right there, which is we had World Cup last year in which a lot of the expenses in sales and marketing were skewed towards the quarter 4 of last year, but we continue to invest for the long term now and we are balancing well what we to do as we keep developing and leading and growing the category with the needs that we have to activate demand across the market.
So it’s all built into the fourth weight, which we just reiterated as we announced in quarter 3. Thank you for the question.
Fernando Tennenbaum: Hi Simon, Fernando here. And on your question, the best answer is probably almost immediately. You need to go to a few administrative tasks that you can only do after you announce, but that takes almost no time at all, so kind of almost immediately. Thank you.
Simon Hales: Thank you.
Operator: Thank you. Our next question is coming from Brett Cooper with Consumer Edge. Please proceed with your questions.
Brett Cooper: Good morning. Just one for me. Have your digital initiatives revealed any products or categories where the company has a small presence today that are areas where you’ve seen ABI demonstrated competitive advantage given your infrastructure? Thanks.
