Dirk Van de Put: Hi, Jason.
Jason English: Hey, there. Congrats on the strong finish to the year, by the way. First, on the China New Year, can you help me understand that a little bit more? Is it that you shift, you pulled more into the fourth quarter, so we don’t get the benefit in Q1? And also on timing, the North America volume was very robust, certainly more robust than we expected. Is there anything unique or one-time in nature that’s helped the health volume in that region this quarter?
Luca Zaramella: So let’s tackle maybe this last one first. As you think about volume in the U.S., clearly, the share situation is improving. The category despite double-digit pricing is posting volume growth, particularly in Q4. So we saw value and volume growing within the category, as I said, shall improve, but importantly, we are also recuperating service level, and that clearly helps a bit. So I believe all in all, there is a strong foundation in the biscuit business in the U.S. And the second element that has to be taken into account is the fact that what we call ventures, namely Give & Go, Hu and also Tate’s are delivering volume and value growth. And we are clearly taking advantage of synergies, particularly in the case of Tate’s, we are very pleased with the fact that, that platform going into DSD has delivered material revenue and bottom line growth.
And clearly, in the case of Give & Go, we are seeing after price increases, the category thriving and that drives really the volume. In terms of Chinese New Year, China was north of 10% in Q4. And there was, I would say, 3, 4 points of contribution coming out of that 10-plus percent due to Chinese New Year. Clearly, that is a reversal in Q1. But again, fundamentally, the business remains very sound. I think you’re going to see continued share gains. And we’re not talking about small share gains in the category of biscuits. And again, as the country reopens, one of the things that we missed throughout 2022 was gum growing. And Gum is going to come most likely positive in 2023, and that will help also the bottom line because margins in gum are higher than in biscuits.
So hopefully, that addresses your question.
Jason English: Yes. Very helpful. And a good segue into my second question is you brought up gum in margin mix. As we bridge out your margins for the fourth quarter, we’ve got a very big hole in our margin bridge, suggesting that we’re meaningfully underestimating the amount of inflation, or there’s some unusual cost or perhaps some much larger mix headwinds than you’ve contested with for the rest of the year. Can you unpack it for us and give us a little more color because with the price you got and the acceleration, it was just surprising to see margins move so much further south?
Luca Zaramella: Yes, I don’t think €“ I mean, mix was positive. So I don’t think mix in general is a problem. I think you saw gum and candy growing 25%, that’s margin-accretive. I think what was underestimated in general in the modeling that I saw around it is the impact of inflation and the subsequent price that was coming out of it. As we price away dollar for dollar and not for percentage margins, I think the €“ there was an underestimation of both pricing and the inflation despite the fact that we said very clearly, inflation was double-digit. I think the way you have to think about it is you wouldn’t have expected for the year a 3% volume growth, you wouldn’t have expected a 1.6% volume mix in Q4, which, by the way, when adjusted for the customer disruption due to Europe in Q4 is again down about 3%.
