Robert Gamgort : Yes. Let me talk about the margin inflection that we’ve seen in the quarter, and we talked about prior to that. And then I’ll ask Sudhanshu to take a look at where we are on — from a segment OI perspective and a forward outlook on that. We had a number of conversations in the past, as you’ll recall, about the gap between pricing to partners and private label versus the inflation that was — that we were experiencing that had never been contemplated in the years in which we had the prior years in which we had signed those agreements. And remember, that’s very different than pricing that you see at retail, just to be clear because I know when I say pricing, people immediately go to retail pricing. What I’m talking about is the contractual pricing that we have with partners and private label, who then in turn set their own retail pricing as a result of that.
And so, we said that there was a lag, but it would flow through. It’s flowing through. We have great visibility to it going forward, to answer your question, because it’s contractual. And I think the other point to make, and it’s an emphasis of the prepared remarks, is that we’ve now adjusted all of those agreements going forward, and we don’t expect a substantial lag to — between pricing and inflation to occur in the future. So, lessons learned from the past, a bit of pain that we had to incur over the past couple of years, but that’s all catching up right now, and you’re seeing that flowing through. In addition to that partner and private label pricing flowing through, we’re also seeing some moderation in inflation, and we’re experiencing an increase in productivity.
As we said a couple of times, when we were in a supply chain disruption mode, and we were trying to get every case out the door, productivity takes a backseat. We’re in really good shape on our supply chain from a capacity standpoint. And we have the ability now to focus on productivity and dial that up. So, it’s a combination of partner private label pricing, productivity, and moderating inflation that is contributing to the margin inflection you’re seeing now and also our confidence and visibility into the future. But Sudhanshu, why don’t to take up a minute and talk more about that last piece?
Sudhanshu Priyadarshi: Thanks, Bob. Chris, if you think through — think about Q4 and beyond, in Q4, we are expecting a sequential improvement in pod shipment as category is gradually recovering. We also plan to have margin expansion in quarter four higher than quarter three. We talked about that before. And we will also see a solid operating income growth in quarter four, even stronger underlying. As you all know, we had a lot of nonoperating benefit in coffee. So, you will have a stronger underlying growth because we’re planning minimal nonoperating thing. As you think through 2024, our plan is to continue to gradually rebuild margin in the coffee category started with quarter three. You saw we went from 30% roughly in the first half to 33%. Q4 will expand further, and you will see this gradual buildup or rebuild up our margin in 2024.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jane Gelfand for any closing remarks.
Jane Gelfand: Thanks, Anthony, and thank you, everyone. We appreciate your time and attention this morning. And as always, the Investor Relations team is available to answer any follow-up questions you may have. Have a great day.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.