Wendy Davidson: One thing I would add to which was, so I think some of you actually subscribe to some of the data that comes from Circana and IRI, but we’re starting to see a return to more accelerated growth in natural products and better-for-you than conventional in quite a few of the categories that we play in. And that tells us a couple of things. One is that the consumer has got maybe a bit more socialized in the pricing that’s been passed through, but we also see a little bit more insulation in those premium products to conventional, which is a great place for Hain because that’s obviously the parts of those categories that we play in. So seeing that consumer recovery in category and the growth of natural products outpacing conventional also gives us confidence as we go forward that we’re well placed and we’ll continue to monitor our pricing versus both other players and categories to ensure that we’re covering inflation but we’re not passing too much on to the consumer.
Andrew Wolf: Thank you.
Wendy Davidson: You bet.
Operator: The next question we have is Jon Andersen of William Blair. Please go ahead.
Jon Andersen : Hey, good morning everybody. Thanks for the question.
Wendy Davidson: Hey, good morning.
Jon Andersen: Wendy, I was wondering if you could talk a little bit about, where in the portfolio, and I’m thinking about categories and brands that you expect the most traction in away-from-home, and if we think about the next several quarters, how that kind of will play out. Also on the question of away-from-home, can you just remind us of where you are kind of currently or Hain is currently in terms of penetration or mix of overall sales and where you think that could reasonably go as you kind of execute your channel expansion strategy? Thanks.
Wendy Davidson: Yeah, I appreciate the question. You know, as we talked about on Investor Day, channel expansion is a huge opportunity for Hain because we’ve been under-penetrated in points of distribution that makes it easy for the shopper to find our products along their journey. And away-from-home, in particular in food service and convenience stores, we’ve said that we think the greatest opportunities for us from a category standpoint are going to be in our snacks portfolio, it’s largely going to be in beverages, a little bit in our meal prep around meat-free, especially in Canada and the UK, and in yogurt, especially in our US market. Those are areas where we would see great opportunity. And as we mentioned, we’ve already begun to pick up soup business in restaurant chains in the UK.
So we see in the UK, it’s a little bit different portfolio. In terms of where our business is at, and I think we disclosed this on Investor Day, a typical CPG company is going to have somewhere between 15% and 20% of revenues are going to come from away-from-home channels. At Hain, it’s less than 2% of our revenues. We’ve planned for a modest over the life of the strategy. And as we said before, Hain Reimagined is what we’ve committed to in the algorithm, is our target, it’s not our aspiration. If you were to do the straight line math and assume 20% of our revenues would be in away-from-home, it would get you to a larger growth number in away-from-home than what we factored into Hain Reimagined. But we want to get some traction, get the proof points, and begin to see that play out so that we can come back and commit to the street a much larger number.
Jon Andersen: And are there any margin implications of the channel expansion, positive, negative, neutral?
Wendy Davidson: Yeah, away-from-home tends to be very margin accretive. In fact, every place I’ve worked, it’s been margin accretive because the consumer is willing to perform for the convenience factor of things on the go, and they’re less price sensitive than what they would be paying for pantry loading, for instance, in a retail environment. What you need to make sure as a company, is that you’ve appropriately built in your cost to serve and that you’ve identified the end-to-end costs so that you make sure you capture either in trade efficiencies, mixed management, price-back architecture, etc. I feel very good that the team that we’ve put in place around away-from-home, both in the UK business and the team here in the US, I feel really good about the revenue growth management work that the team’s done for what it will take with our portfolio to be well positioned to drive that distribution.
And I feel really good seeing the early momentum that the team’s driving in the points of distribution that they’ve gained in away-from-home. So I feel like we will have some good news to share with you in the coming quarters.
Jon Andersen: Great. One last one, just on capital allocation. I think, Lee, you mentioned you’re targeting $50 million or $55 million of free cash this year. What’s the priority set? I assume debt reduction, leverage reduction, but just talk about that and maybe more broadly, the capital allocation priorities going forward? Thanks.
Lee Boyce : Yeah, so I think you said its two things. Its leverage reduction overall, but then we also, as we free up cash, it’s also to be fuel to push behind Hain Reimagined. So again, as we look, I mean, one of the key initiatives we talked about was payables, for example. I mean, we’re making good progress in the payables area. We have kind of updated our internal processes, and we’re working back through with our suppliers. So we’re seeing traction there. We’re also coming a little bit later, but focus is on inventory. But to answer your question, it’s balancing two things. It’s the reduction of our leverage, and again, then using that fuel to invest behind the business.
Jon Andersen: Thanks. Good luck.
Operator: The next question we have is from Alexia Howard of Bernstein. Please go ahead.
Alexia Howard : Good morning, everyone.
Wendy Davidson: Good morning.
Alexia Howard : So you started to talk about the state of the consumer. I believe it was in reference to the US or the North American market. I’m just wondering if you can compare and contrast what you’re seeing with consumer behaviors, channel shifting, trade up or trade down between the two regions. I’m just trying to get a sense check on whether consumer confidence is improving or deteriorating in each region? Thank you.
Wendy Davidson: Absolutely. So let me sort of broadly, we know that the European consumer has been more acutely impacted by overall inflationary environment. And in fact, inflation continues to be a higher level there than what we’re seeing in the US market in particular. It’s also a market that has a larger concentration or larger penetration for private label. And we’ve seen significant growth in discounters. So I would say in the European market, we’ve seen a couple of things. We’ve seen consumers trade down to discount locations. We’ve seen them trade down to private label. The good thing for Hain is that we’re in categories that the consumer is wanting regardless of the economic environment, but they are buying it from different locations and they’re going to private label and brand.
