Luca Zaramella: Yes. Maybe look, transparently and it is noted both on the pages of the prepared remarks and in my script. Argentina, I think, in total for the company accounted for a little bit more than two points, not much more than that. If you strip out gum completely from the year-to-date numbers and for the — both volume and revenue, I would say there is no material change to either volume or net revenue. So in terms of growth rates, I would say Argentina is clear, but it has always been in that range, I would say, a little bit higher in Q3. In terms of gum, no material impact to the top line dynamics on both volume and revenue. I think as you go into next year, or as we go into next year, the inflation that you’re going to see is higher than mid-single-digit.
I think it is going to be towards the higher end of 5% to 10% at this point in time. Coco lately has had a material spike. The reason being the pulp count coming out of [indiscernible] and Africa has been materially different than what people expected, I would say. So there is pressure on coco. The good news is we are covered for a good portion of the first half next year, and we are protected as well for the remainder of the year. So I’m not going to give you a lot of details here, but you would expect inflation in general to go up. And lately, I think you know, energy costs have been going up a little bit more crude oil, particularly. So I would say we are not done, I believe, in terms of inflation at this point in time. There’s still could be variability exchange rates is the other one that comes into play.
But it might be a little bit higher than the mid-single digits we told you, but we are going to be flexible for sure. As we go through the plans, we have a sensitivity analysis, and we make sure that we are never going to be called by surprise here. Our coverage is favorable, but we will be pricing at replacement cost into ’24.
Operator: Our next question comes from David Palmer, Evercore ISI.
David Palmer: Thanks. Just, first, a follow-up on Andrew’s 2024 question. It seems like we should be thinking at least in an year for profit, but maybe a little bit higher than normal on revenue, largely because of the pricing side. Correct me if I’m wrong on that thinking. But digging deeper, I just wanted to ask you, you mentioned some things that were giving you confidence about next year, such as the distribution gains in emerging markets. What are some of the hurdles or watchouts that you’re really thinking about specifically for your business? This earlier this year, it was about getting through pricing in Europe. What are some things you’re really watching out for as you go into this next year?
Luca Zaramella: Thank you, David. I don’t want to spoil the ’24 guidance too much. I know you really want to get a sense of where ’24 is going to be look at this point. We have made material investments in the business this year. We believe our categories are very sound across the world. I think we — you saw the share numbers we have been posting. We are happy with overall business momentum. I don’t want to say exactly how next year is going to play out at this point. I think your assertion on top line and bottom line is more or less correct. I said we are working through the implications of gum and the EPS impact of it and stranded costs. I’ll give you a little bit more color in the next quarter. As far as distribution goes, look, particularly in emerging markets, there is a reason as to why we are telling you, China for us is okay or India is okay or Mexico is okay.
And the reason is that our categories in general are underpenetrated. And the second reason I would say is there is a meaningful amount of growth, both in developed and emerging markets that is coming out of distribution gains. I think in the US, for a series of reasons you know, supply chain-related, we lost some PDPs along the way. We are reinstating those PDPs. We are going into alternate channels where our share is a little bit lower. So at this point in time, I feel good that you’re going to see a good policy top line into ’24. Hopefully, that helps, but I can’t spoil it much more than that.
David Palmer: No, that’s helpful. Just a quick question on the US. There was another player out there that we’re seeing some reduced merchandising activity and shelf presence because of clean store initiative and a major retailer. You guys are pretty good at getting merchandising. Is that going to affect your business in the near term in the US?
Dirk Van de Put: No, no. We are in good shape as it relates to shelf availability and stock levels. The shelf availability is higher than it was last year. The stock levels are where they should be. They’re not high. Our sales are higher, our units are higher. We have more displays, we have more items carried with that retailer. So we see no effect. I want to point out that we do have a DSD system that covers the stores. And that is always very helpful in driving in-store execution and finding the necessary extra space and presence. And so we’re also making sure that we have the right level of staffing at store level. But no, I cannot confirm that we see the same effect. We feel very good about how things are playing out at the moment.
Operator: Our next question comes from Michael Lavery, Piper Sandler.
Michael Lavery: Thank you and good afternoon. Just wanted to check on Ricolino. You’ve said that the integration is progressing well. That’s a case where you have a revenue synergy opportunity just given their distribution footprint. How quickly is that ramping up? Is it — can you give an update on just how that’s progressing and if that’s coming along with your expectations? I think the expectation was it would give a lift to some of your legacy brands as well. How is that coming along?
Dirk Van de Put: Yes. So talking about the top line synergies, first, what — how we’re going to get those is that we are integrating the two distribution systems. And that will, for our side of the equation, triple the amount of distribution points that we will have. So pretty important top line synergies there. But the first step is to get that integration going. We’re in the middle of testing. We had to carve out the distribution system out of Bimbo and for Ricolino and set up a new system, which is bigger than what we currently have in the company. So we have to open about 100 distribution centers. In Mexico, we’re three quarters along the way with that, and that is going very well on time and as planned. And we have started the testing of the combined routes in several of those distribution centers.
