Chris Bellairs: Yes, yes. Thanks. Okay. So yes, we are beginning to land those contracts. As you heard before, as we’ve discussed in previous calls, those tend to be full calendar year contracts. So we’ve been bidding on those throughout the back half of last calendar year. And now we’re beginning to see some of that volume come into our portfolio. It’s slow. Some of the contracts I think we said in the past that some of those retailers may move more slowly and transiting from the old contract to the new than they have historically because the new contracts have priced in some of the inflation that’s taken place over there. So we’ve definitely won some good contracts and are beginning to see that, and we’ll continue to see that ramp up over the back half of this year and into the first half of next year as well.
Michael Lavery: Okay. Thanks so much.
Operator: Thank you. Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.
Rob Dickerson: Great. Thanks so much. A lot of questions have been asked. So maybe I’ll just shift to capital structure a little bit. I respect your comments on further optimization or lack thereof needs in certain brands. But as you kind of speak to the ability to scale, I guess, some brands and more specific categories over time, the first question is it logical for us to think that step-up in brand investment will likely be focused on more specific categories to actually get you there? And then secondly, kind of as part of the overall review process that you’re doing internally. Is there any area where you would actually consider or think about at least adding to CapEx to maybe build a bit more internal capacity relative to doing the co-man model? That’s it. Thanks so much.
Wendy Davidson: As it relates to whether we want to be self-produced or co-man, I think that really comes down to where we think supply chain is going to be a distinctive part of a brand or a category. I’ve worked at companies that were majority co-man, and it was never an issue because they were areas where the manufacturing was not what made it unique. It was the brand or it was the route to market. So it will be on a category-by-category basis, brand-by-brand basis. That said, the one thing we do need to do, and the team has done a nice job of managing our co-manufacturing relationship similar to how we manage our own manufacturing. So monitoring the same levels of plan attainment, cost structures, quality, ability to be able to service the marketplace.
We need to hold our manufacturing partners to the same standards that we would hold our own manufacturing locations and some of the adjustments that we’re making in our operating model, so that we do have a full end-to-end supply chain model that has that visibility and management.
Rob Dickerson: Got it. Super. Well, see you next week.
Wendy Davidson: Sounds good.
Operator: Thank you. Our next question comes from the line of Andrew Wolf with C.L. King & Associates. Please proceed with your question.
Andrew Wolf: Thanks. Good morning and welcome, Wendy.
Wendy Davidson: Thank you.
Andrew Wolf: My question is also on your marketing. You’re welcome. So as I look at Hain and I see the U.S. versus the UK, Europe, at least in my view, it’s structurally pretty different between the brands, their distribution, their maturity, their growth potential and things like that. I guess the question really is, is the structural difference enough that you have to kind of almost come up with two different kind of playbooks, one for each segment that’s quite different than Hain truly had global brands?
Wendy Davidson: Well, I think today, you’re right. There are very few in our portfolio that today are truly global brands. The question though is, do we have brands in our portfolio that could be more global or could span broader geographies. And if so, how do you effectively have a global brand strategy and then local execution, regional execution? Those are big questions that we’ll be asking as we go through this strategic review is to make sure that where we can we will and how do we best get global leverage around those brands and global awareness. It’s very possible that you look at our business today, we have some wonderful regional and local gems that, as I said in my opening remarks, are number one or number two in their categories in their region.
They may only stay local or regional. But we do have some brands that could span outside of its core geography, and we have a right to play there. Those will be the areas that we’re exploring and setting ourselves up to be able to go after that.
Andrew Wolf: Thank you. And this is a follow-up, Chris, on the tea destocking you referenced just for my own bet, could you clarify, it was a warm winter, at least or late fall, and that can drive disappointments in demand for the category. Was it more of that? Or is it kind of brand related? Or was it just also just the fact that the retailers have been €“ had negative €“ in the U.S. have had negative volumes for quite a while and they’re just kind of readjusting. Could you just give a little clarity on what you think happened? And what’s the go-forward look from the retailer?
Chris Bellairs: Yes. Good question, Andy. Definitely not brand related. We see it as being category related, and it was driven by two things. One, you mentioned the warmer weather that depressed tea sales throughout the quarter. But a part of it €“ the second part actually goes all the way back to earlier in the year, kind of the December, January period at the beginning of the calendar year when the Omicron surge took place. So Omicron surged right about the time that retailers would have been starting to bleed down their inventories from the prior tea season. So they bought in a second round of inventory to account for the Omicron surge, then Omicron faded and a lot of retailers were left with heavier inventories that they normally would have had coming out of tea season.
And so then we arrived at this year’s tea season, they ordered again, and now they found they kind of almost had two sets of inventory, some left over from the Omicron surge and some from the new. So at that point, we started to see late in the quarter, the selected retailers beginning to reduce their tea inventories. We would believe across the category, not just on Celestial.
Andrew Wolf: Okay. Thank you. That was clarifying. Appreciate it.
