And that will help preserve volume momentum into ’24. And I think you know that our categories in emerging markets are underpenetrated, and we have made investment to really continue to grow. Platforms that we have acquired in recent months like Clif and Ricolino are progressing very well. And they will deliver more synergies as we go into ’24. And while I don’t have a number on the gum divestiture to disclose to you, the idea that we have is really to get rid of all the stranded costs associated with the divestiture of gum in developed markets. So I can’t be more precise, but so far, so good in terms of ’24 expected financials I would say.
Operator: Our next question comes from Ken Goldman, JPMorgan.
Kenneth Goldman: Hey, thank you. I just wanted to get a clearer sense of the messaging around share repo. You paused in 3Q. You reduced your outlook for the year. But at the same time, you’re saying, hey, if there’s an opportunity, maybe you can pull forward some of your planned repo for ’24, if I heard that right. So I just wanted to maybe sure I heard that right that I can reconcile these comments. And maybe it’s just as simple as you pivoted a bit toward debt paydown earlier this year, you weren’t 100% sure when gum would close. Now these factors are somewhat behind you, so you can forge ahead on buybacks. I just want to ensure it’s a little bit of a whipsaw effect there in terms of how we’re seeing or I’m seeing the commentary? I just wanted to make sure I can clarify that.
Luca Zaramella: Thank you, Ken. No, you’re absolutely correct and right in your analysis. We continue to see share repurchases as a key driver of total shareholder return. I do analysis regularly on the buybacks that we do historically, and we present them to our Board as well. I mean it’s fair to say that all the repurchases we have done since the creation of Mondelez have yielded good — very good returns, while in excess of our cost of capital. Our ability to buy back stock at this point in time is meaningful considering what we have bought so far this year. And look, we will remain flexible and disciplined. The reality is, I also believe that our stock is a bit undervalued at this point in time. And so we will be tactical in the way we approach this.
But I don’t have really much to add versus what you correctly said in your question. I also want to make sure that it is clear that this doesn’t imply anything in terms of changes from our capital allocation framework. I mentioned Clif and Ricolino in the prepared remarks. I’m very pleased with the numbers that I see coming to. I think those were great opportunity for us to deploy capital. Dirk mentioned that we have some capacity constraints. There is nothing better in my mind that investing in brands that are proven like Oreo, Milka, Cadbury Dairy Milk. Proven proposition, distribution gains et cetera are really making the return on those investments quite good. And finally, dividends, we are committed, and we will continue to raise dividends in the foreseeable future.
So strong cash flow, I think, you might have seen $0.5 billion up versus last year. Everything is going fine in terms of capital allocation, I would say.
Kenneth Goldman: And then quickly, just at the risk of, I guess, eliciting some grown maybe by dredging up last month’s topic, just curious where you are in your research about GLP-1s? Even on a broad level, if you don’t have specifics, is there a reason to think that your snacking categories won’t be affected, just assuming there’s any impact at all? Just wanted to kind of pick around for your initial thoughts there.
Dirk Van de Put: Yes. Thanks, Ken. Well, first of all, I think the whole topic has been overblown. And I think it’s important to put it in perspective and look at the data. At this stage, we see absolutely no short-term impact on our results. We don’t see it in our business. We are, of course, monitoring and we have a special work stream to stay close to the topic. We do estimates, we do projections, we talk to pharmaceutical companies, we talk to consumers and so on. So we’re staying close to the subject. But long-term, even using the most optimistic forecast, we believe the impact will be very modest to our volumes in our categories. We’re talking about 0.5% to 1% volume effect 10 years down the road. That’s based on what we know today and projections that are not ours, but that are being used by several different sources, and that assumes quite significant adoption rates of the drug.
Even if the impact would be bigger than that, I think over a 10-year period, it will be manageable, and we will have adequate lead time to adjust and prepare for any changes that we see. Having said all that, if you think about it, obesity rates around the world are very different. And we have one of the lowest exposures since 75% of our sales come from outside of the US, 40% of our sales are in emerging markets. And so the average BMIs in all those countries are much lower than in the US So our exposure is significantly lower than some of the other food companies. On top of that, I believe that our portfolio is really well positioned. We constantly innovate and adapt our products. We do that all the time to adapt to changing consumers’ tastes and behaviour’s.
Portion control is a big part of our strategy. So 20% of our sales are already in snacks that are less than 200 calories. We have a large part of our portfolio that is chocolate, which is not hunger satisfaction, but it’s a small indulgence. And we have healthier alternatives like for the breakfast occasion, belVita, which is a replacement snack or some of our snack bars, which are meal replacement, and that fit perfectly into the diet of GLP-1 patients. So if I go through all that and if I’m honest, at this stage, this is really into our top areas that we are focused on and that we are trying to manage. We monitor it, but it’s really not a big concern for us at this stage.
Operator: Our next question comes from Bryan Spillane, Bank of America.
Bryan Spillane: Hey, thanks, operator. Good evening guy. So I guess I had one follow-up to Ken’s question and another question. In terms of the follow-up to Ken, in terms of capital allocation, Luca, you had — you were opportunistic, right, in terms of paying down commercial paper. You paid off the term loan this year, kind of attacking some of those either variable rate or avoiding sort of swapping out of low interest to high interest . So as you’re looking over the next year or two, like are there even many opportunities to where you would opportunistically pay down debt? Or again, not changing your capital allocation sort of philosophy, but just it doesn’t seem — it doesn’t appear that paying down debt would necessarily be at the top of the list just given what you’ve done over the past year? And then I have a follow-up.
Luca Zaramella: No, I think, that’s absolutely correct. We are very happy with the loan tenure debt that we have. The average cost of debt is very compelling. It was a series of decisions that we took over the last few months, including the sell-down of KDP to really go and strengthen the balance sheet and making sure that we were not facing material pressure in the interest cost line. I think in hindsight that has proven to be quite a good decision. The reality is, I still see our stock as undervalued. And so when you look at the cash flow this year, and you adjust for the coffee taxes that are really one-time in nature, I mean, you start talking about $3.7 billion, $3.8 billion of cash flow generation. And I think if you take that and continuous growth of dividend, we have what it takes really to manage the business very well.
And so I don’t feel really compelled at this point in time to go and pay down more debt. We have some debt coming due next year. It is absolutely manageable. And when that comes due, hopefully, interest costs will be lower than today, but again, not really a major concern for me at this point.
Bryan Spillane: Okay. Great. And then just two follow-ups on some of the commentary you’ve made about ’24, and I might have missed this, but I think you had said previously mid-single-digit cost of goods inflation for ’24. So just is that still something we should work with? And then as we’re thinking about organic sales growth, I think, you’ve been in this quarter, if you take Argentina and gum, collectively, they contributed about 500 basis points to the organic sales comp. So just — I don’t know, as we’re thinking about not extrapolating too much, right? Just how we should think about some of the other puts and takes on organic sales growth and understanding you gave some comments about volume and price, but just want to get your perspective on that, those two items?
