The reality is our spend levels are about where they need to be. But we probably need to do that a little different. In marketing, we’d like to step it up, but I’d also like our working non-working marketing mix to be improved before we just add more dollars to it. So the team’s done a lot of work to actually drive marketing investments, analysis. So what’s the return on the dollars that we’re spending? How do we shift it to working marketing rather than non-working? And how we are measuring the impact on household penetration, brand awareness. How is it helping us drive distribution and reach? So we’ll do more effectiveness work in ’24, before we drive incremental investment in the out years. I think we want to get better at using the dollars we have today, before we just put more dollars to things.
Matt Smith: Great, thank you for that. Wendy, I can pass it on.
Wendy Davidson: You bet.
Operator: Thank you. Our next question comes from the line of David Palmer with Evercore ISI. Please proceed with your question.
David Palmer: Thanks, good morning. A follow-up on Ken’s question, he said that he put it in a presumption that there was a — the vast majority of the $20 million is incentive pay refunding and not brand building. Could you maybe confirm if that’s true? And if it is, clearly there’s going to be some shifts in spending, and it sounds like snack, beverage, baby, are big investment areas. And you want to have the promotion firepower to support past innovation, which all makes a lot of sense. I wonder, generally, where do you see inefficiency, where maybe you’re shifting dollars out of, generally speaking?
Wendy Davidson: Yes, well, first to your first question, as Chris said, about two-thirds of that $20 million is refunding our incentive plans, and those are self-funding. So you would expect as we deliver on revenue growth, as we deliver on profit growth, that’s what would trigger the payment of those, but they self-fund, but in the mechanics of it on a year-on-year basis is why you see it as an increase. The other third is a little bit of investment in capability. Revenue growth management, that we’re driving trade efficiency and effectiveness of the spend we have today. Our push into away from home and enhancing our e-commerce capabilities. So you’ll see a little bit of investment there around capabilities. From a where do we see inefficiencies in the business?
If we just look at our cost versus the industry benchmark, and I think we’ve shared this before. I think actually in your fireside chat, in June, we talked about this. That, there’s a fair amount of inefficiencies in number of distribution locations, number of manufacturing locations, effectiveness of our supplier spend and supplier base. The amount of inventory we have on hand in both raw and pack and finished. Our days it takes to pay, et cetera. So there’s, as we think about this scrutinizing every part of the business end-to-end. There are pockets of cost, that’s just been baked in. I think largely because we were a company built on multiple acquisitions, that largely weren’t integrated. So part of what we are leaning into is integrating where we can drive efficiencies, that allows us to push those dollars to support brand building, rather than just supporting the running of the business.
And that’s where you’ll see us outlining on Investor Day, that pace of fuel delivery and productivity, the pace of operating model change that enables us to then lean in and fund, how we want to support our brands and pushing them out into the marketplace.
David Palmer: That’s great, and just if you had to say the biggest variables, you’ll be tracking, as you’re heading into fiscal ’24. I would imagine shifts in the spending, and the response to those. But if you had to describe what are the big must-haves for this year, what would they be? Thank you.
Wendy Davidson: Yes. The big must-haves. We’ve got to drive distribution growth and we’ve got to drive good velocity of our distribution. So, we want to be our customer’s best partner, in the most highly productive offering on shelf, and ensuring that not only get it in on shelf, but we are in place to stay on shelf, because we’re a highly productive SKUs. So those will be things that we look at it end market. From brand health will look at, basic brand health guide the household penetration and awareness of our brands. Making sure that the spending we’re doing in our marketing dollars is getting us the return that we would expect. And then from a business standpoint, we’re watching very closely our cash conversion cycle. So, days of inventory both in raw and pack, days of payables, days of sales outstanding, because every one of those days in our cash conversion cycle is money that’s just tied-up, that could be invested back into the business.
So we’ll be looking at the efficiency of how we use our working capital.
David Palmer: Thank you.
Operator: Thank you. Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
Anthony Vendetti: Thank you. Just in terms of the price increases, is that relatively the same across the board, or there certain products where you can’t take price? And then as a follow-up, obviously, you’re talking about slight revenue decline in the first quarter and then low-single-digit growth for the full year. Organic revenue growth of 2% to 4%. I know we’re not talking about ’25 here, but as we move into the back half of the year and into ’25, should we expect the growth in revenues to start to move towards mid-single digits, as we move to the back half of ’24 and into fiscal year ’25? Thanks.
Wendy Davidson: We’ll definitely give you a lot more color around those questions on Investor Day. And certainly what our long-term algorithm looks like, but also what we think the building blocks are that gives us the reason to believe that it’s both believable and achievable. So more to come on September 13th relative to that. I would say, if I just step back, and look at the categories that we’re in. And we look at the brands that we have. And we look at the market reach potential that we have. Those are the things that give me confidence that we have brands that earned their place on shelf. That we have an opportunity to drive reach across the marketplace that gives us revenue and margin expansion opportunity. But it’s ours to go drive into that.
So you need to see us show you that essentially on Investor Day. From a pricing standpoint, the team did a really nice job of taking pricing holistically, this last year. You won’t see us do that kind of pricing, because it’s a very different environment now. And I think every company has seen this opportunity to take a wholesale price list change, the consumer is just not going to be willing or the retailers to do that. So it has to be bit more surgical. For us this means, and this is the investment around revenue growth management, we need to be looking at trade efficiency and effectiveness. But we need to really be looking at price-pack architecture. So do I have — could I take pricing on particular pack sizes, to particular channels, where the consumer my view less price sensitive, because they’re willing to pay a premium for convenience for instance.
