I would say that foodservice traffic has been pretty steady. And it’s been a nice kind of stabilizer from a channel perspective for some of our ingredients. And then I’d only say that kind of somewhere in between is distributors. And so the distributors obviously serve more medium and small customers. They can be either innovative packaged food companies. They might be in foodservice supply. And it’s really, I think, within distributors that I think that we’re seeing, that’s probably the gap where I would say that as they have worked through their excess inventory going out to that medium and small customer base as some of those medium and small customers are fighting to get back on shelf, they’re fighting to get their innovation.
Taking up that demand is where we’re probably seeing the recovery.
James Zallie: Yes. And what I would say is that, as I indicated, that we’re seeing early indications for quarter 4 that the sequential improvement in volumes are continuing. And that’s also with distributors. The only thing that we’re trying to read the tea leaves on is with a little bit of that momentum pick up, we’re also trying to be realistic in relationship to how we may see customer buying behavior tied to what Jim was saying about the year-end in December related to corn costs coming down, etcetera. And so we’re trying to interpolate all of that as we put together our forecast, say, for quarter 4. But I do think it bodes well for volume momentum to continue in quarter — into 2024.
Unidentified Analyst: Great. And then just on the higher sugar prices. So you sort of mentioned you’re starting to see some demand substitution coming through there. Just thinking about the pricing side. So how should we think about your ability to kind of price within syrups and Stevia, relative to the move-up in sugar there? Is that going to assist with sort of value capture heading into next year?
James Zallie: Yes. Go ahead, Jim.
Jim Gray: I mean, Lucas, I know it’s a little bit newer to the business, but I’ll just give you one example. So when we look at Mexico and you look at beverage bottling business, they use a blend of sugar and high fructose corn syrup. Most of that HFCS is imported from the United States. And there is a value gap that actually liquefying sugar and using it at the current domestic price of sugar in Mexico is much more expensive than using HFCS imported from the U.S. And so to the extent that you’ll see beverage bottlers will still move that mix. They’ll move that mix to 55% or 60% HFCS. And while that’s a small percentage move in the recipe, it’s actually quite a bit of demand. And so there’s not many customers that have that ability, but that is a pretty clear example where you can see that benefits the demand pull for HFCS for the industry out of the U.S. And that’s an example where you can see that happening.
Unidentified Analyst: Thank you.
Operator: Thank you. [Operator Instructions] One moment for our next question. Our next question comes from the line of Adam Samuelson of Goldman Sachs. Your line is open.
Adam Samuelson: Yes, thank you. Good morning everyone. I guess the first question, maybe just continuing on Mexico just quickly. Is there — is there any way to quantify just in North America, where profits and margins expanded strongly? Is that — was Mexico an outsized contributor to that, both in terms of your local production as well as maybe shipments from the U.S. to Mexico? Or would you say that the profit growth was really across the — the whole American platform?
James Zallie: Yes. I would say it was proportional to — across all of North America. But it — Mexico for us has been a consistent deliverer. And again, we highlighted the fact that it was a record operating income quarter for the Mexican business with really pretty much robust demand across the product categories in which we supply. And remember, Mexico production goes for Mexican consumption, but also some for export as well for the products they’re producing, especially in brewing that would be exported from Mexico to the U.S. But from a standpoint of its contribution to overall North America results, Jim, I would say it was proportional in the quarter?
Jim Gray: Yes, proportional. And I would say within U.S./Canada, you still saw a pretty decent sweetener demand. And we saw an uptick in industrial starches. You really — Jim can speak to it more, but better pull for packaging for some of our industrial starch solutions. And then the only, I’d say, the soft spot that has been all year has been more of our texturizers, as those volumes have — have we really seen the impact of destocking on really some of our texture.
James Zallie: Yes, which go into center of the store, which has been talked about being a little bit softer and impacted by the destocking.
Adam Samuelson: Okay. That’s helpful. And then just on specialties, you gave the slide talking about your 6% growth year-to-date. And you give some of the year-to-date performance in some of the key buckets in the starch-based texturizers, pharma, personal care, Food Systems. Those three items are well — growing well above the total specialties. And so what is below the 6% underneath your specialty umbrella? Is it just the protein side? Or help me clarify kind of where — what is not performing at the — above that specialty average?
James Zallie: Yes. I would say that plant-based proteins is definitely compared to what our expectations were for the year has been soft, and the market continues to be soft. The two categories that we talked about last quarter in Q2 but now for Q3, the IRI data for plant-based milk and alternative meat sales volumes were down 10% and 18%, again, respectively, which is the same as Q2. So that segment, compared to our expectations, remains soft. And then I would say the only other category is in the area of, say, clean and simple ingredients, which have higher price points. I would say that would be one other category, but it’s proportionately compared to, say, starch-based texturizers overall, not as large, but that has been a little soft. But we’ve got a great franchise there. So we anticipate that that’s a long-term trend toward clean formulating and natural labeling will continue to bode well long term. Yes.
Adam Samuelson: Okay. And just to clarify, tied to the reorganization that’s going to go into effect early next year. What — and maybe it’s not completely finalized yet. What is the reporting going to be externally? Is it going to be kind of a specialties versus core dynamic? Or are you going to be giving starch-based with some of the key specialty kind of buckets as you list them here? Just how are we going to be seeing this going forward?
James Zallie: Yes. Adam, not really finalized yet. And we have some clear ideas internally of where we’re headed, but we’re not ready yet to communicate the specific segments. The narrative from a standpoint of core and specialties will likely change as we move to, again, a global operating segment and/or segments or different segments. But I think Cagney [Ph] in February and the earnings call in February is when we’ll be in a better position to sharply clarify how we’ll be defining all of those reporting segments.
Adam Samuelson: Okay. All right. That’s helpful. I appreciate it. Thanks.
James Zallie: Thank you Adam.
Operator: Thank you. One moment please. Our next question comes from the line of Andrew Strelzik of BMO Capital Markets. Your line is open.
Andrew Strelzik: Great. Thanks for taking the questions. Good morning. So for my first one, I just wanted to revisit the 4Q guidance and the implied guidance. And you already talked about some of the assumptions around volume in North America. But just curious, any other swing factors relative to the high and low end, it is a bit of a wide range that we should keep in mind about the fourth quarter in your assumptions?
