As it relates to pricing, so the pricing for 2023 in the U.S. has passed and is implemented. So we did that in December. In Europe, we have started discussion with our clients. I would say we are 60% done of what we need to do. So far, so good, but there is obviously still a few weeks and months to go, and we will know more by the end of March, beginning of April, where we stand. But so far, so good, I would say. The other thing I would mention as it relates to the consumer is that the elasticity is still very low. This is a slight uptick in Europe, but still well below the expectations. We are planning for more elasticity in our 2023 outlook, but we still have to see that materialize. The other one, I think is important to mention is that we will have double-digit cost inflation.
There’s a lot of talk about diminishing inflation. We don’t see that at the moment, and that is driven largely by energy, ingredients and labor. Nevertheless, if you take all that together, I think we are positioned well for 2023. Luca will talk a little bit about the different shape of our P&L, but we will be on algorithm with a higher topline, but that is driven to the whole inflationary situation. So maybe Luca, I hand it over to you.
Luca Zaramella: Yes. Thank you for the question, Andrew. And as it relates to the shape of the P&L, particularly on gross margin, you will see some pressure, particularly in the first part of the year, a result of a couple of things. One, it is elevated inflation and us having particularly good coverage in 2022 and lapping the favorable pipeline that we had in commodity terms in 2022, and the fact that clearly, pricing, particularly for Europe, is not fully implemented yet. The new pricing wave I mean. And that is also compounded by the expectation that we will have some customer disruption kicking in towards the end of Q1 and potentially also into Q2. Having said that, I think when you look at the fundamentals of the business, I feel quite good about emerging markets.
You saw the stunning number that we printed for Q4 and for the year. The momentum of those emerging markets is continuing into Q1. We started the year quite strongly. I’m quite happy with the U.S. and North America in general. I think there was an excellent pricing execution. And obviously, as the last pricing wave comes into effect into the P&L, that allows for reinvestment in the business. And I think also you will be positively surprised by share throughout the year. Clearly, EU is a little bit of a watch out. Happy to say that the profitability, as you saw in Q4 improved quite a bit compared to Q3 and that is the testament to the team of the pricing that was implemented. But clearly, there are some unknowns in relation to further pricing and potential disruption, and we have commented on consumers in general.
So look, the key assumption here is double-digit inflation. Part of it is driven by the favorable coverage we have. And we will stay disciplined in pricing it away. And as I said in the prepared remarks, if commodities take a more benign impact, we will be able to take advantage of it because we have flexible coverage implemented.
Andrew Lazar: Thanks so much.
Dirk Van de Put: Thank you, Andrew.
Operator: Thank you. Our next question will come from Ken Goldman with JPMorgan. Your line is open.
Kenneth Goldman: Hi. Thank you.
Dirk Van de Put: Hi, Ken.
