Dave Ciesinski: Sure. So, we got a couple of things there. I want to make sure I got my notes straight, Andrew. Your first question was how are we thinking about inflation and the need to pass on pricing? And maybe to build on Tom’s point, what we’re seeing as you look at our basket of commodities, they’re essentially flattening out. We are seeing some modest inflation on labor that’s a little bit higher than normal, but we feel like we’re able to offset that with our productivity program. So, if you put this together, we don’t expect margin headwind per se from inflation be it the commodity basket or from things like labor. . So, then you sort of press it forward and you think about the retailers one, we don’t think that there’s a need for us to go and to talk about elevated pricing and for reasons that I’ll get into here in a second, we think that it could probably be disadvantageous.
And maybe the way that I would frame this is that I think our economy or we think our economy right now is at a transition point, not an inflection point, but a transition point that’s really being brought about by the end of the era of free money. I think all of us have been doing it long enough that we can remember back when interest rates were at normalized level. And so I think what we’re looking at, the context that we’re framing this whole situation and is this idea of the end of the air of free money. And what we’re seeing then is manifest in the form of resumption of elevated interest rates on credit card debt and other things that people are buying on time. The resumption of student loans, the end of emergency pandemic benefits, such as child tax credits and enhanced SNAP benefits.
And when you put all of that together for consumers, this end of this era of free money. I think what we’re finding is that families are sitting down and they’re reworking their sources and uses of cash. and they’re having to make trade-offs. And I think what we’re starting to see now is depending on where they sit in the economic, it’s starting to bite some consumers and families before others. But I think all of them are starting to sit down and look at sources and uses. And for some of those families, they’re saying, hey, I want to work more hours to be able to cover the cost of, let’s say, student loan resumption. In the case of others, they may be saying I want to do that. And by the way, I also need to start to think about making choices and trade-offs across everything that they’re spending on, from experiences to food to discretionary items.
Now, this brings us into your question on promo. I think the way we’re thinking about it is that in this environment, now it’s a transition environment from where we are to where we’re going, it’s going to be really imperative that for us, managing brands, every one of our brand leaders, our sales folks need to be looking at their consumer value equation. The features, the benefits, the brand, right, over the cost to make sure that in this new environment that we’re transitioning to that we continue to bring a relevant value proposition because consumers are in the process. They’re not talking about it, but they’re doing this right now. And I think for everybody that plays in our space, we need to be stepping back and asking ourselves some of those fundamental questions.
And to the degree in which we see our value proposition is under pressure, then we’ll think about using things like trade or marketing or even things like shopper marketing in-store or price pack architecture and things like that. But the way we’re really thinking about this, we’re trying to take maybe a little bit more of a strategic view because we don’t really think this is going to be a one year or a one-quarter thing. I would submit that what we’re working our way into, again, is at an inflection point like 2007 and 2008. This is a transition point where we just need to make sure that we’re continuing to offer a relevant value proposition.
