We’re well covered there because our portfolio is both private label and brand and we see that play out in our growth. We’re growing in private label faster than we’re growing in the branded business to recover, but the team’s well positioned to have that in that marketplace. The North American market is different. We’ve seen the inflation rate was lower than what we saw in Europe. In the better-for-you category in particular, we did see the consumer adjust behavior and it’s not moving to private label. So we haven’t seen a growth in private label concentration, but we have seen consumers buy less units rather than buying at different locations, but we are starting to see that stabilize. The most recent data from Circana showed three of the categories that we’re in, we pivoted back to, in the latest 12 weeks, growth of natural products outpacing conventional in those categories.
The one category where we still see challenge is in the snacks category, but there’s significant promotional activity there on conventional products and so we’re not seeing the same move to premium at a greater rate than conventional snacking, but in every other category we play in, we are definitely seeing the growth in the category for better-for-you items across all retail outlets to get back to what we would have seen two years ago in category dynamics.
Alexia Howard : Great, and as a quick follow-up, marketing spend, can you quantify how much it was up this quarter and now that you beat on EBITDA, how much you expect marketing spend to increase relative to the previous expectation because it seems clear that you’re reinvesting in the business?
Wendy Davidson: Yeah, so we, from a year-on-year basis, the marketing spend was up a relative small amount because we had spent quite a bit in quarter one last year. As you recall, then we essentially went quiet. We turned back on marketing in quarter three of fiscal ’23, ramped it up in quarter four. We’re sustained at about that level because we held what was significant increased marketing spend to support the launches that will take place in quarter two and into quarter three for launch support, but our marketing spend is about where we had planned for it to be. We’ll spend at the rate that we expected to for this year, which is a bit of a step up from fiscal ’23. I think what’s more important is that you’ll see us have sustained marketing investment quarter-on-quarter and should not expect to see that a place where we will save dollars.
So we’ll drive efficiencies in our overall spend before we drive any reductions in those spend, which aligns with what we’ve said. We will get better before we spend more and we’re definitely seeing the team driving better analysis on return on investment of our marketing spend for better campaigns that are better tested to then be able to ramp up our spend in the back half of the year.
Alexia Howard : Makes sense. Thank you very much. I’ll pass it on.
Wendy Davidson: You bet. Thanks.
Operator: The next question we have is from Jim Salera of Stephens Inc. Please go ahead.
Jim Salera: Hi everyone. Thanks for squeezing us in. I know a lot of questions have been asked on the away-from-home channel, but maybe if I could sneak in one more. Do you guys have a sense for which products you’re replacing on the shelf in these end markets? Is it existing better-for-you products or should we see this as your entry into those formats as really being kind of an expansion of their better-for-you offerings on shelf?
Wendy Davidson: That’s a great question and it would really depend on category and it would depend on segment. In the case of snacks, we see it as an and. And in many cases, our products are appealing to a consumer who otherwise doesn’t have an option in those locations. So it’s an incremental placement in those locations. In areas like beverage, especially in tea brands, is a replacement for something else that, you know, another brand because the Celestial Seasoning brand is the market leader in herbal teas. But in many cases, we’ve not been available where the consumer would expect to find us. So as the preferred brand, we’re looking to drive distribution so that we’re available to the shopper when they’re on the go. As it relates to yogurt, it’s either incremental because they’ve not been utilizing something in that location.
So this is the team working with those customers on this as an add and why it is a good incremental ad to their assortment. So it’s really going to depend. Is it in restaurants? Is it in C-store? Is it an on-the-go retail and whether it’s a binary purchasing decision or whether it’s an add to the assortment?
Jim Salera: Great, that’s helpful color. And then maybe I can switch gears. If we look at the Circana, the consumption data for the tea bags category, it seems like the category is kind of bebops around basically flat consumption. But private label has been doing much better, especially over the last, call it 12 months. Is there anything dynamic wise that you can do, whether it’s with increased promotions, or kind of more focus on that category to normalize that and get your piece going? Or is it just consumers are trading down and it’s kind of have to wait for them to readjust to the shelf prices?
Wendy Davidson: I’m not familiar with the trade downs of private label and tea because that’s not consistent with the data that we’re seeing. What we are seeing is obviously tea season, we’re heading into that now. And we also know retailers are doing resets in preparation for tea season. So you wouldn’t really expect to see a lot of tea growth at this particular point in time, but actually Celestial’s done really nice. We would expect to see that ramp up as we go into tea season and as you start to see the assortments that we’ve already landed begin to show on shelf.
Jim Salera: Okay, that’s helpful. Thanks, guys. I’ll pass it on.
Wendy Davidson: You bet.
Operator: Thank you. The next question we have is a follow up question from David Palmer of Evercore ISI. Please go ahead.
David Palmer: Thanks for the follow up, just wanted to follow up on your comments on channel mix. US measured channels is something obviously we all follow closely on. I’m wondering, for us Circana or Nielsen watchers, what should we be seeing that would be consistent with your guidance? I know FX and non-measured are going to be helps for the year, but should we still be thinking at least some growth, up low single digits or so in US measured channels starting in your fiscal second half?
Wendy Davidson: Yeah, this is where things will be challenging as we’re leaning into the areas of growth. So let me sort of dimensionalize it a little bit. In our business, 40% or so is International, which is relatively a black box, I guess, unless you buy the Nielsen data in the International market. But we will try to provide a little bit of color as we go forward on where we’re seeing category growth, where we’re seeing channel growth, so you’ve got some visibility to that. Then in the North American business, so call that 60% of our business, only about 65% or so of that business is in measured channels. And where we’ll be leaning in is going to be in non-measured. So we’re also in the process of identifying how we provide some visibility to you in terms of tracked and measured so that you’ve got visibility across channels and can expect that.
