Ian Craig: Yes, yes. Like I said, I mean, there’s an uplift that we expect from the loyalty plan, and also from carrying the flexible delivery. Also it is considered, you have to keep in mind as this progresses, we expect to be able to take advantage of all the data that we’re going to be getting from the market to improve the quality of our top line, not only the frequency and the KPIs that Ian mentioned, but the quality of the top line based on getting all that feedback from the market from that 4.0 app that is going to inflate throughout the whole next year.
Luis Willard: All right. Yeah. So that’s too perfect. Thank you, Ian.
Operator: Thank you. Our next question comes from Ricardo Alves of Morgan Stanley. Please go ahead.
Ricardo Alves: Thank you very much. Hello, gentlemen. Thanks for the call. A couple of follow-ups. The cost and margin outlook for 2024. I’m looking for a net-net potential impact that you foresee with the comments that were made on the hedging side. You know, on one hand, you have sugar as a big question mark for investors, to the point that Jorge was making potentially a big headwind in the near-term, but then the future is already pointing out in the second half of next year to lower prices potentially a little bit of a tailwind. And then you have the complexity of more favorable PET to the point that Gerry was mentioning and aluminum price is favorable, FX as well. But on a net-net basis, what do you think the message is for us in terms of modeling your margins for South America and Mexico into 2024?
When you think about the hedges that you’re already having put in place, but also when you think about how tactical you can be on hedges on for example sugar based on the futures or to the point that Gerry was making on being more technical and PET as well. Difficult to come to terms with what’s going to be the net-net. Sorry for the long question on that. My second one is on beer in Brazil. It seems that you guys seems to continue to gain back share. So just an update on that. We hear different things on the market, Tigers struggling, Eisenberger booming but wanted to hear from you what are the main drivers? Appreciate that the base is low we always talk about that, but the reality is, you are getting back to your first base in the market.
You are gaining share. Is that a brand issue? Is it a channel pricing has been actually a big noise today with Heineken numbers? So just a little bit more granularity on Brazil beer as well? Thank you very much.
Gerardo Cruz: Thanks, Ricardo. I’ll start it out with our outlook for prices, FX impacts, raw materials. I think as Jorge mentioned in the previous question, we are concerned of what we’re looking at for sugar, I think mainly driven by the supply side of the sugar market we are expecting to see significant pressure in sugar prices compared to what we saw this year. The rest of our raw materials, specifically related to packaging, we see a flattish scenario as compared to our hedged position that we had this year. So we don’t expect major disruptions from packaging, we do expect a more complex environment in sugar. In FX, I would say that the net effect also as compared to our hedge position this year should be flattish. We don’t expect significant volatility aside from Argentina and in the rest of our operations. So we wouldn’t expect to see major disruptions in margins from the FX portion. Jorge I don’t know if you want to add anything on that?
Jorge Collazo: Well, with regards to cost theory, I think that’s pretty much covers it. Perhaps moving on to the question with regards to beer in Brazil, and as you mentioned, regarding Heineken reported this morning. So we would say that pretty much in line with what they mentioned, and we are seeing an improvement versus the start of the year pretty much in line with the second quarter. And the main drivers of this also then again in line with the comments, we continue to see the trends of premium and mainstream portfolio that continue to have a stronger momentum. And actually, just to give you a sense back in about 2015, the premium segment in Brazil was about 10%, we estimate and that today is about – it’s over 30% of the market.
So that gives you a sense of how important and that part of the portfolio, that part of the industry has been growing. Now having said that, now we continue with our strategy. This includes expanding coverage of the brands of our portfolio we’re leveraging strategies with RGB, the returnable glass bottles, but it’s a strategy that takes time. With regards to share, I’ll turn it over to Ian I think he can definitely provide more color.
Ian Craig: I think, both volumes and share are – were expected flattish. It’s a tough market with tough competitors. A lot of switching between brands, which I won’t go into detail, but so far where we’re staring now is flattish shell sales for us.
Ricardo Alves: Thank you very much, everybody.
Ian Craig: Thank you, Ricardo –
Operator: Thank you. Our next question is from Alan Alanis of Santander. Please go ahead.
Alan Alanis: Thank you so much, Ian, Gerry, Jorge and congratulations, very, very impressive results. And thank you for taking my questions. I want to go back to the question around Mexican volume growth from a different angle. And let me put it in a bit into context. I mean, the biggest pushback from investors regarding bottlers or one of the biggest pushbacks is the lack of volume growth. And you’re just breaking that paradigm that volume cannot grow at the level that you’re delivering. Many of my calculations are right, your volumes are already 14% of all pre-pandemic levels and Mexico was already one of the highest per capita consumption countries in the world. I mean, before the pandemic. So I want to dig a little bit deeper in terms of how you’re breaking this paradigm.
If you could give us a couple of examples of the RGM analytics, how you’re using them in? And also if you can just clarify and explain a little bit more. I think you said 20,000 or 28,000 new clients in Mexico, where do these clients came from you already spoke about market share. And that was very clear. So I was going to ask about that. We can see pricing. But what we cannot see, is this effective or this strategy or with the strategy that you’re following around RGM analytics? And where are you getting 20,000 or 28,000 new customers in Mexico? That would be my question. And again, congratulations.
Ian Craig: Hello, Alan how are you? There are many pieces of information to your questions. So I’ll go about it without prioritizing the size of the different buckets in the answer about both. I’ll tell you about this when we got into to manage the company, we tried to do an assessment of the growth opportunities that we had. We came above those in several ways in the case of Mexico, one was, recovering share with you’ve mentioned them and talked about because we had lost 5 points over there. And so those were out there for the taking. There were other opportunities on RGM, where we had glaring opportunities in our one-way family size, OBPPC, which we adjusted it as inter channel opportunities in our 600 ML, we had certain buckets that we weren’t addressing in flavors.
So we’ve been making those adjustments to our three leaders to our Flavors portfolio, to our cross channel pricing. And, we have – we’re very fortunate in that we have a Coca-Cola Company as our exclusive partner with very powerful brands. So once we were making those adjustments, also making better use of our DME investments as well. And then coupled, and I don’t want to minimize this, coupled with the investment that we’re doing to debottleneck our infrastructure, because we have significant unavailability in the last year, which was reduced by half. So when you add all of that, you’re seeing volumes respond quite nicely, share respond as well. And we’re very confident that and by the way, also single-serve mix respond as well.
So, you know, so far, so good is going well. And for the doubts that we had out there, per capita are increasing, penetration is increasing in households. So, we’ve had a lot of hyper capitals for those are increasing. And then when we decided to validate all of our growth assumptions on a macro level, so we run model based on disposable income, population growth and many other high level variables, it matches perfectly for Mexico, there’s a lot of disposable income growth that is going to be coming in, even more so in the regions where we’re located. And the volumes that we’re seeing match up nicely to our macroeconomic crosscheck model that we have. So let’s say, we came about it bottom up with a strategy with RGM and OBPPC opportunities, and we validated that with a growth algorithm based on larger variables and they do check.
