Jon Moeller : And one other opportunity that we’ve talked about a little bit this morning, as additional supply comes online, there are often opportunities to increase support for the business to take advantage of that additional capacity. So we’ll be looking for those, as Andre said, positive ROI opportunities to drive the business. You asked about enterprise markets. When you get down to a country level, of course, it’s very variable. But 14% growth on the top line, all three regions growing at over 10%. So the strength is pretty broad there.
Andre Schulten : Yes. And if you look at L.A., 21% growth, for example, so that will be the top end of the growth and fairly consistent here. So enterprise markets continue to deliver very strong results. Last point maybe on the media investment. The synergies we’re able to create are a real and not insignificant. So if you look at Baby Care, for example, that business has grown 10% last year. They have completely shifted the way they run their media. They’ve increased reach by 20%, increased top-of-mind awareness by 26%. All of that while they saved 15% of their media spend. So the equation here really allows for sufficiency at lower cost.
Jon Moeller : And that, again, just for clarity, is a U.S. dynamic that Andre has just described, the 10% growth. And I’ll leave it there.
Operator: The next question comes from Olivia Tong of Raymond James.
Olivia Tong : Great. If memory serves me right, much of the pricing actions from last year will start to lap in the March quarter. So in your view, is the December quarter the one that has the biggest spread between price and volume? And could you talk about where your elasticity stand relative to historical view? And if — and how price and volume tracked at the end of the quarter versus the minus 6 versus plus 10 average for the quarter.
Andre Schulten : Hey, Olivia. The — let me start with elasticities. The overall view has not changed. We continue to see more favorable elasticities than we would have expected on historical data pretty much everywhere, but Europe focused markets. And you can see with 10% pricing flowing through. And when you strip out the non-consumption-related volume effect, a 3% reduction in volume, that is a very benign elasticity that we’re seeing in aggregate and allows us to hold volume share and value share as the pricing flows through. So we feel good about, again, the strategy, doing what we wanted to do and the execution being very diligent in each of the markets. Europe is the one place where elasticities have returned to what we would have expected more on historical data, and that is driven by the increased pressure on the consumer.
We’re also seeing a little bit of price lag here. So private label, for example, is pricing slower in Europe, and that increases temporarily the price gap versus private label. Nothing we didn’t plan on, but that explains part of the higher elasticities. In terms of peak pricing, you’re right, many of the large price increases get left this fiscal year. But that doesn’t mean that we’re not putting more pricing in the market. So for example, we have a number of price increases that go into effect in February. So there’s two components here. One where lapping price increases were executed last year, but we’re also still passing through some of the cost pressures via incremental pricing around the world.
Operator: The next question comes from Chris Carey of Wells Fargo Securities.
Chris Carey : I just wanted to come back to Steve’s question on investment priorities. If I take your fiscal year outlook, you’re clearly implying better margins in the back half of the year. But if I just walk through a gross margin bridge of what perhaps makes sense, it does seem to imply you’ll need to see leverage on the SG&A line in the back half of the year to drive margin expansion potentially notable SG&A leverage despite sales decelerating. So again, if you could just help me frame overall SG&A and whether you think you’ll be ending the year with appropriate levels of spending? Or if you expect investments to maybe grow progressively over the next 12 to 18 months as, for example, your capacity continues to improve, as Jon just said.
Andre Schulten : I wouldn’t expect a structural shift in SG&A spend. I think what you’re seeing in the run rate is about what we expect to need in order to be sufficiently funded and the gross margin — and most of the margin expansion will come from gross margin expansion as we ramp up productivity, pricing continues to flow through and that builds gross margin period-over-period. So that will be the bigger contributor. And we’re not counting on any major reductions in SG&A beyond what productivity allows us to deliver again, at current sufficiency levels, and we are very carefully looking at what can we reinvest actually and still deliver within the range that we want to deliver.
Operator: The next question comes from Kaumil Gajrawala of Credit Suisse.
Kaumil Gajrawala : Good morning. Your commentary, I guess, just now on taking further pricing, it’s obviously appropriate given we have a series of costs that are still coming through. But can you maybe just talk a little bit about the response from retailers and is that changing in any way? Not that long ago, it seemed across all of CPG, it was maybe easier to get some pricing through. And I’m just curious if that’s changing in any way.
Andre Schulten : Yes, Kaumil. The environment continues to be constructive. We don’t see much change in retailer conversations. It’s focused on how do we best play the role that we need to play as a category leader in many of the markets by combining pricing with innovation, executing pricing in a way that consumers can appropriately choose from different price points, different value tiers. And how that plays out at retail shelf, both virtual and physical shelves in the best possible way, so we can help them grow their category grow foot traffic, et cetera. Those are really the majority of the conversations I would characterize this quarter or next quarter as any different than the previous quarters, where really it’s about how do we do this, when is the best time to execute. It’s not should we or must we take pricing. I think everybody still understands that we are recovering costs after we recover as much as we can with productivity.
Jon Moeller : And as Andre said, the conversation, much more constructive for all concerned when we focus on improving consumer value holistically defined. And that’s exactly what Andre was talking about in terms of the combination of innovation and pricing. And when that’s the conversation, it takes on a very different nature than a more transactional discussion. Also don’t forget, our retail partners are the owners of the private label brands that we compete against. They’re facing many of the same dynamics in terms of their cost inputs that we are. So just to reconfirm what Andre said, it’s been a generally constructive discussion. I don’t see anything in my interactions with our retail partners that causes an inflection in that discussion in the near term.
Operator: The next question comes from Robert Ottenstein of Evercore ISI.
