We have a pretty sizable business that is in rice snacks and it’s growing very fast. Within the Frito portfolio, there are also different substrates that we’re playing. Off the Eaten Path is a great example. You have multigrains, then you have smaller substrates. One substrate that we like a lot is Chickpea. Chickpea has a high nutritional values, and it’s I think it’s a substrate that we are starting to work on agro, and we’re starting to work on different layers to create advantage in that substrate. So yes, we see that strategically as an incremental opportunity to broaden our portfolio beyond the more traditional substrates where we build a lot of supply chain advantage and innovation advantage and brand advantage. But I think our brands can expand into other spaces, especially some of those smaller brands, but also we’re thinking about some of our bigger brands as well.
Hugh Johnston: And Nick, just to put a finer point on Ramon’s narrative around China. Well, it’s strategically quite an important market for us, obviously, given the size and potential there. Currently, it’s about 3% of PepsiCo’s sales. So it’s not going to be a major driver in the numbers for a few years.
Operator: Thank you. One moment for our next question. Our next question comes from Kaumil Gajrawala with Credit Suisse. Your line is open
Kaumil Gajrawala: Hi, guys good morning. Can you elaborate a bit more perhaps on the beverage alcohol strategy? It’s been a bit of time now since you first kicked it off. And maybe the big question is you talked about Frito-Lay. You have several very large, very profitable businesses. This isn’t yet one of them. But how big or how far does it have to get before it can be more relevant to the overall Pepsi story?
Ramon Laguarta: Yes. Listen, we see an opportunity in expanding our distribution capabilities to other spaces in the U.S. and maybe eventually in other parts of the world in beverages and also in snacks. So the alcohol distribution strategy that we have is one that is, I would say, embryonary in the way that both geographically and from the amount of brands that we carry in our portfolio. We are very focused in getting it right, in getting the learnings, getting the execution right, is different, right, and selling our soft drinks, our sport drinks or other brands. There are more nuances, regulatory-wise and execution-wise. So we’re in that process of learning. I think strategically, you should see this becoming an important part of our business in the U.S. But we’re going to learn before we scale up.
And I wouldn’t think about this as we’re going to be an alcohol distributor. I think we’re going to choose a few partners that will create brands with us and products, and we will be distributors of a small portfolio of high-potential brands rather than just a lot of brands in our distribution system, which will be too complex and probably little value for us.
Operator: Thank you. One moment for our next question. Our next question comes from Chris Carey with Wells Fargo. Your line is open.
Christopher Carey: Hi, good morning. Hugh, I wanted to actually ask about just SG&A. Certainly, investment has been a key topic for the company as ever, but including this year and especially in Q4 with how the year ended. But I’m also looking at your filings this morning, which show that distribution costs have probably been the one line item where the SG&A increases have been most significant. Clearly, marketing is growing, but not as big of a contributor. And so I’m just trying to understand what’s going on here specifically. Is this your being offensive with investments into your shipping and handling network? Is this natural inflation? Should this level of inflation on that line item specifically continue? Or as freight rates are starting to ease, should we start thinking about inflation here easing and perhaps you can start investing in other areas?
