I think we have a great shelf set already at Walmart, if you go walk into the stores, we certainly have room for improvement as far as areas that we can continue to move into. But yeah, I mean primarily what we’re going to continue to do is drive strong marketing and build awareness of our brand. Our brand awareness has built over the last three months an additional from 27% to 31%, we’re going to be investing, we’re not getting go into the details of this today, but we’re going to be investing into our brand awareness next year at an even higher level to drive that awareness further and we are confident that that will continue to convert again not only around those new items, but the velocity of our existing items in store. As far as pricing, we’re not going to go into any details on that.
We will continue to monitor the market and find opportunities to make sure we’re delivering the best value for our consumers.
Sarang Vora: That’s great. And my second question, Steve, I think you mentioned there is a substantial would — substantial opportunity to improve gross margins next year. And I know you aren’t giving like a very specific guidance, but can you help us walk through some of those key elements that should strongly help you next year. I think RTD margins is the one that you mentioned, but just curious if you can help us more on the gross margin expansion next year? Thank you.
Steve Kadenacy: Yeah. Sure. Good question. I think if you look at our current quarter and you remove some of the one-time hits that we took to right-size our inventory, our margins were closer to 37%. As we look forward into the new year, we’re looking across the entire supply chain for further savings. But also we get natural benefit from the FDM channel category in general because we’re more profitable there, but we’ll give you more detail on that. We certainly believe there is more upside to where we are. We believe there is more upside to even though the adjusted number that I just gave you of 37%, and when we come back next quarter, we’ll give you what we believe we can do in 2024 and perhaps beyond.
Sarang Vora: Thank you.
Operator: Thank you. Our next question is from Joe Altobello with Raymond James. Please proceed with your question.
Joe Altobello: Thanks. Hey guys, good afternoon. I guess, first question on the cost savings to $30 million. That’s certainly got my attention. Could you give us some more detail on where that’s coming from? What time period do you expect to realize those savings and does that drop to the bottom line or do you see that getting reinvested?
Evan Hafer: So the timing has been about $15 million that happened prior to the quarter. There’s another $15 million coming out in the quarter. It’s a combination of various types of expenses like professional fees and other things that are naturally rolling off and/or we’re bringing more discipline into the business for us to do things ourselves and the other are reallocating our resources to the things that are really growing and driving profitability now. So there is a head count element to that. I’m not going to get into the detail side of that, but that’s all coming out in the quarter.
Joe Altobello: Okay. I guess — I guess to follow-up on that when do you expect to realize all of it though?
Evan Hafer: Sorry but it will all be realized through by the end of the year and then your second part of the question, which I didn’t address and I apologize for that is, are we going to reinvest some of that? Yes, we will and that’ll be largely on the marketing side.
Joe Altobello: Got it. And then secondly in terms of the FDM partners, you mentioned you’re at 14 today. I think you mentioned you had one a year ago. If I look at your wholesale doors, I think they down year-over-year and I think you’re up very modestly sequentially. So help us understand the big growth in the partnerships, yet, you have very few incremental doors coming from that?
Chris Mondzelewski: Yeah, that’s a great question, Joe. I think really we’re looking to re-guide the way we look at this to ACV or all commodity volume, it’s just for us it’s a better way to guide that our resources are going against where we believe we’re going to get the greatest return. So we’ve been ensuring that we go after the customer partners. Again, I want to reiterate that we believe are going to deliver the greatest value in the alignment to our mission. But they are also allowing us to impact ACV in the most efficient way against the fewest number of doors and these of course are going to end up being your larger partners. So I think when you look at the math of some of what you’re talking about a lot of that is really the migration of the business and again when you look at where we were a year ago, it was one major FDM partner.
We had a lot of smaller partners who were still showing up. And when those partners come in promotionally et cetera into the business that can affect how those door numbers look, which again we believe does not allow us sometimes to make the best internal decisions and again this is why we’re going to see us talking much more around ACV as a guiding metric.
Joe Altobello: Okay. Understood. Thank you.
Chris Mondzelewski: Sure.
Operator: Thank you. Our next question is from Jon Andersen with William Blair. Please proceed with your question.
Jon Andersen: Hey, good afternoon everybody. I wanted to ask about brand awareness. You mentioned in the prepared comments, I think the brand awareness has doubled over the past year. Where is the awareness level for the brand today? How does that compare to some of the other bigger package coffee brands in the marketplace? And you’ve referred to kind of 2024 marketing initiatives designed to drive brand awareness in presumably more kind of trial and more entry into the brand. If you could discuss the magnitude of the step up you’d expect and how some of that money might be spent. Thank you.
Chris Mondzelewski: Yeah. Thanks, Jon. I’ll address that. I think, so brand awareness is measured based on whatever sort of supplier you choose to measure it with. So any number that I would put out would be directional in nature. But as I mentioned on the previous set of questions, we’ve seen it move from 27% brand awareness up to about 31%. That was just in the last quarter. And when you look at that versus a year ago, then yes, as I said in the prepared comments, it has essentially doubled. One of the biggest components of what drives our brand awareness is actually our distribution in the market. So not to minimize marketing, I’ll talk about marketing here in a second, but simply driving our distribution on shelf is actually the most efficient way for us to be able to raise our brand awareness.
