Mark Clouse: Yeah. So, the other supply chain cost is a variety of variables, and maybe Carrie and I can tag team on this one a little bit together. But I’d say there’s three things in there that are influencing that margin pressure that we’re seeing now. The first is, I would describe some inflation, albeit not core inflation, cost of the supply chain, some of the intrinsic costs within our plant costs have been a headwind and have moved kind of in concert, I would say, with inflation. And so, although we don’t categorize it as core inflation, I would say generally that’s what’s behind it. I think the second is, it’s also there is a mix dynamic that is within that cost structure that’s related more to SKU mix and even as we see some of the brand and category mix, even through to SKU, we’ve seen a bit of a headwind there.
And then, the third area is and again not completely unexpected that’s also where you see absorption and some of the fixed cost leverage that you would experience in a circumstance where volumes might be a little bit down from where they’ve been, and that’s pressure that’s there. So, as you can expect that normalization, whether it be from the mix standpoint, inflation standpoint, and/or even the volume standpoint, that’s why we do not see those continuing forward. And you will begin to cycle if you were to go back and look at our Q3 and our Q4 from ’23, you would see rather significant contributions from those buckets as well.
Carrie Anderson: Yeah. I would just add that, think about some of those elements that Mark just talked about, it’s cost of manufacturing versus cost of sales, there is a timing element that ultimately moves from your balance sheet to your P&L, and it — we’re cycling some of those things as Mark talked about on absorption as he mentioned.
Jason English: That’s helpful. Thank you. And Mark, Carrie, another sort of higher-level question on the outlook for snack foods. The notion that snack foods are growth advantaged has come under some pressure recently, supported by the data. If you look at consumption data, there’s been pretty sharp deceleration of volume trends across numerous snack food categories. Love to hear you opine on what you believe is driving that deceleration, whether or not you think we are sort of pivoting into a period where the growth advantages of snack foods are behind us. And if so, or if not, why? What drives that expectation?
Mark Clouse: Yeah, it’s a good question, Jason. I think what you’re starting to see is a little bit more bifurcation within snacking. So, I do think there are places where we are seeing greater pressure, especially where, I would say, segments are a bit more commoditized. What’s interesting in the first quarter if you look at our results, you saw power brands, right, which are now about two-thirds of our business continuing, I would say, albeit at a slightly lower rate of growth than we may have had in the past, but still certainly a healthy delta versus what, I would say, the average for total food was, doing fairly well and continuing to perform well and even the underlying vol/mix trends on that business for the quarter, they were essentially flat for the — I think, down just under 1% for the power brands.
But what you are seeing is some of the — a pretty healthy step down on a couple of areas, both the partner and the contract brands, that’s a little bit more of our catalyst of managed continuing to optimize DSD. And I talked about that for the first time in more of a complete way. And I know a couple of questions there that I’ll answer in Q2 and give everybody kind of a full picture of margin timing and a few other things that I know we owe to folks. But I think what I would say is we continue to work actively, although an important part of our business to manage that effectively. And then, some of our non-core snack businesses were weaker in the quarter. And they tended to be segments where you had a little bit more pressure from private label or competition in general.
I would point to bread was a little bit weaker in the quarter and things like microwave popcorn and some other areas that albeit not power brands certainly are not insignificant and had a little bit of headwind. So, I think there’s going to be a period here, Jason, where although I would suggest that overall you may see a little bit of pressure on some of those categories, but we have to remember, too, I mean, these snacks businesses, last year at this time, most of these power brands were growing at 20%. And so, even when I put the in-market 3% growth up against that business and combine it over a two-year horizon, you’re still talking about strong double-digit growth over the last couple of years. And so, it’s always a little hard to get the calibration of what’s a trend that’s going to sustain and what’s kind of the normalization a little bit of the business.
So, I still feel very bullish about it. I think we’re going to, again, not unlike we’re doing in other categories, have to stay very vigilant on what consumers are looking for and making sure that we’re positioned well. But I would say so far so good relative to how we’re seeing that play out.
Operator: Your next question comes from a line of Jim Salera from Stephens. Your line is open.
Jim Salera: Hi, guys. Good morning. Thanks for taking our question. Mark, I wanted to drill down a little bit on the snacking, particularly, Lance and Late July posted, I thought, very impressive share gains. Just offer some color on what’s driving the strengths of those two brands in particular, compared to kind of the broader power brands portfolio?
