You don’t see it in the organic reporting so far, but it’s going to start to kick in in Q4 and we expect to have another nice positive. And then the third element that I think you see of course nicely in Q2 is our pricing power. We see today very clearly on combustible. We have some headwinds that are temporary coming from Germany and Japan on heat-not-burn, but we retained pricing power, which is positive for the long term. And these are good elements. Of course, in front of that we will keep investing and making sure that we are maximizing the growth potential, but that’s really what is behind the margin development for the year. Now, on top of it, and I think we’ve been flying that during this quarter, we have the development of businesses that are coming with lower margin because we are buying to (sub-parties), and that is a different margin dynamic.
And also, this business which we called below V1, which is in fact with reduced excise duty in Indonesia, that is coming with lower margin. It’s more a technical effect, I would say. And as mentioned, without that we would’ve been, in fact, in the middle of the bracket that we gave the 50 to 150 negative. And again, this is not reflecting the positive contribution for ZYN. So, I would say as a summary, things are happening as expected and we start to see the fact that we have on the long term some fundamental positive drivers for our margin that I summarized.
Pamela Kaufman: Thank you. That’s very helpful.
Operator: We will take our next question from Vivien Azer with TD Cowen. Your line is open.
Vivien Azer: Hi, good morning. I wanted to follow up on the commentary on ZYN, certainly consistent with the very robust trends that we’re seeing in the Nielsen scanner data, accelerating growth, strong market share gains. You’ve spoken in the past about the opportunity to offer some incremental investment for that business unit to expand the sales force, improve distribution and drive velocity. Can you just talk to us about where you are in that assessment time horizon for ZYN, please? Thank you.
Emmanuel Babeau: Sure, Vivien. Yes, ZYN is – I mean, we knew that the brand was great. I think we are seeing something that is above our initial expectation to be very clear for the time being, at the time of the acquisition of Swedish Match. There is clearly a growing awareness of this category. We see a lot of poly usage. So, you have a percentage that is fully converted, but a lot of poly usage. We talk about people discovering that they can enjoy their nicotine in moments where they cannot enjoy, whether they’re combustible cigarettes or other inhalable product. That is certainly playing. I think there is a very positive lifestyle element around the development in the US that is gathering momentum. So, that is, I think, explaining the success of ZYN, that is the icon of the category, and of course, taking today the lion’s share of the growth of this nicotine pouch progression in the US.
Now, that is very good news of course, because that means that we have a very dynamic business in the US. To be very clear, it’s not marginal at the group level. So, you will see, and you already see in the performance, the impact of the ZYN US performance. So, that’s great to have another driver for our smoke-free performance and globally for the financial performance of the company. But it’s setting the scene very well for IQOS because on top of what is successful, we’re going to be able to build a very efficient commercial engine. You said it increased sales force. We’re in the making of that. It’s happening progressively. It’s of course going to help both ZYN and IQOS, but that also goes very well for our capacity to develop IQOS successfully in the future in the US.
