Darcy Davenport: So, yes, we are able to segment our customers kind of to the like loyal, high value and occasional, and that’s an occasional deal speaking. That’s how we knew that we were losing our household penetration as it’s gone down this last year. We were losing those occasional deals seeking buyers. So half of those buyers actually left the category completely and then half went to a variety of different competitors that were on deal there and those will just always move to the next deal. That’s how they operate. We also know that consumers — that as consumers stay within the franchise, they continue to buy more and become more valuable. So for instance, the ones that entered at the beginning of the pandemic, they have doubled, those consumers have doubled their spend.
So it’s all about — the model is all about bringing in new households and then continue to graduate them to spend more. So I think we will — I think the deal seeking buyers when we promote again, I think, they will come and go. They are not our focus. Our focus is to bring in these loyal high values and then continue to graduate them up and spend more.
Ken Zaslow: Right. I guess around — because you said in your comments that any time we produced anything that’s been sold, like, we can’t — you can’t produce anything and not sell it. So, therefore, why sell it to somebody who would not pay full price, right? I mean you don’t have a consumer problem. You have a distribution or a production issue. So that’s only
Darcy Davenport: Right.
Ken Zaslow: my thinking.
Darcy Davenport: Yes. It makes sense. I think that promotion and really, and we are not going to — we don’t expect to start promotion until we have the adequate supply. I think what promotion does and what I was saying to John earlier is, it is really around the display and getting more eyeballs, and therefore, more household penetration.
Ken Zaslow: Okay. Thank you.
Darcy Davenport: Yeah. Thanks.
Operator: We will take our next question from Jason English with Goldman Sachs.
Jason English: Hey. Good morning, folks. Thanks for slot me in.
Darcy Davenport: Good morning, Jason.
Jason English: I suppose I kind of want to pick up on that last question, but really about timing. You characterized this year as the year of coming back into the main demand. When do you expect to be in a position to start stimulating that demand?
Darcy Davenport: Our current plan right now, Jason, is to bring back some of this paused SKUs midyear and then to start marketing and some light promotion in the back half.
Jason English: Okay. So for those of us tracking the data, we should expect a deceleration based on comps as we enter next year, I expect and you tell me if you would see it differently. And on shipments, you mentioned, I think, in the press release that, you expect to use the first half to reload inventory. Should we expect the shipment versus consumption disparity, meaning a surplus of shipments over consumption to persist through the first half of the year?
Paul Rode: Yeah. So I will take the last one. So we do expect some modest shipments over consumption in the first half as we — as you touched on earlier, rebuild the remaining customers that we have that aren’t at optimal levels, but I think it is moderating from where it’s been. So I’d expect it to be fairly modest until we get to reloading some of the paused flavors, as Darcy touched on, which we expect to happen sometime in the late first half into the second half. So that obviously would be a load ahead of consumption. But those are the two primary items.
Darcy Davenport: And Jason, you touched on
Jason English: Okay. I am sorry, about
Darcy Davenport: Yeah. Sorry. Go ahead.
Jason English: Yeah. Yeah. Sure. You said some of comps. I said some of comps.
Paul Rode: Yeah.
