Stephen Rolfs : The Color destocking, it was food colors and cosmetics. You’re right about that. It would appear as we look back at this and conduct somewhat of an autopsy, although we were seeing this, as it was going as well. Customers very much started with destocking at the highest value items they had on their balance sheet, which is a fairly logical approach. Flavors and Colors whether derived for food products or in the case of Colors cosmetic products, those tend to be lower-valued items on a balance sheet, right? They’re just not nearly as expensive as some of the ingredients and input costs that our customers have. As they went down the list and focused on the highest value, eventually they got to Flavors and then they got to Colors.
I think that’s largely why you saw the progression that you did and then of course with Colors being somewhat after Flavors, but still with the desire to kind of clear the decks by the end of the year, you saw that Q4 acceleration of destocking in Color, not only for food, but for cosmetics. The underlying growth in the food industry in North America continues to be, well, in Q4 of 2023, it was negative. It was actually a decline of 1% or 2% in the overall market. Europe, we believe it was about flattish and then in other parts of Asia it was up. With respect to cosmetics though, you have somewhat of a mixed bag at the prestige level, the high-end level, we see good volume growth and we see good volume opportunities. At the mass market level, that’s where there was a considerable degree of destocking and perhaps even a reduction in consumer demand, that though is very good for our business because in terms of the product that we develop and the portfolio that we have, it can not only serve the mass market, but in particular can serve the prestige market quite successfully.
So, I think that as you look at Q1 here, there’ll be a touch of destocking in both food and cosmetics, but you can only get your inventory levels so low before you have to start ordering. And that’s obviously what we started to see here with many of these customers. But to go back to your previous question a little bit, again, 2023 was sort of a once in a century dynamic in the food and personal care space. Nothing like that has ever happened. So, anybody’s ability to predict if anybody’s going to tell you this is exactly what’s going to happen, they’re making it up. In my opinion, nobody’s, there is no wise old man here. And so, we’re going to go with what our customers are telling us, what they’re projecting, but it’s what they’re projecting.
So, we’re going to focus on our pricing, we’re going to focus on our service levels and we’re going to focus on our win rate and that that’s Lotus mid-single, but longer term, we should be right back on track with our mid-single-digit revenue where we were in ‘20 and ‘21 and ‘22. So, I’m confident in the long term, it’s just a question of when do we get to the long term? Is it Q2 to Q3? Maybe it’s the end of Q1, we’ll see.
David Green : And then just thinking about the momentum that you’re seeing in Flavors and extracts, it sounds like there are some really sort of solid wins there. Should we expect those to be coming through pretty quickly in terms of the top line?
Paul Manning : I think Flavors will kind of be faster out to the gate than Colors and again, they have very, very strong win rate and they got, they’re kind of out of the destocking now. So, I think those two things conspire to make for a good start to the year for Flavors.
Operator: There are no further questions at this time. I would now like to turn the conference back over to the company for any closing remarks.
Paul Manning : Thank you everyone for participating in our call today. That will conclude our call. Thank you.
Operator: The conference has now concluded. Thank you for attending today’s presentation, and you may now disconnect.
