Chris Carey: Hi, good morning. The U.S. volume growth improvement is very constructive. It’s quite a bit better than what we can see in the U.S. Nielsen data, for example. I know the data is far from perfect, but I wonder if you could just help characterize whether you have any non-track channel boosts or in general talk about some of the specifics of what has really driven this volume improvement over the past five quarters. And I think maybe just connected to that if you could. There’s a lot of debate right now across consumer staples around just what does drive volume improvement, whether that’s promotional activity or increased advertising or just the lapping of pricing. And I find it interesting today that this dynamic of sequential volume growth, and I wonder if you can just maybe talk about in general why this seems to be happening, what you’re doing to drive this, or whether this is just the natural evolution of markets post substantial pricing.
So, thanks so much for that.
Andre Schulten: Yes. Hi Chris, let me start. On the non-covered channel side, we’ve seen non-covered outpace cover channels for a period of time. This is not different. There’s nothing specific happening there. We see a trend of some consumers going into larger pack sizes. Those are in club, those are online, and many of those effects continue. But there’s nothing differential between covered and non-covered channels. Both are performing well. Non-covered a little bit ahead of covered, so that’s why you don’t see the results in the track data. What’s driving the growth? I would argue it’s all of the above that you’ve mentioned, right. I think, we’re seeing pricing lapping, consumers seeing the pricing normalizing on the shelf.
We don’t see an increase in promotion depth or frequency, quite frankly. We are still operating at about 85% of pre-COVID levels from a volume sold on deal perspective. Competition is in a similar range, so there’s no escalation of promotion. But what drives it, is strong innovation, innovation that is focused on growing the market, and strong communication of that innovation in a very targeted way, leveraging our capability, to be very detailed and very intentional on who we talk to, at what point in time, with what messaging. The U.S. is probably our most sophisticated market in that regard, and it shows in the ROIs and in the results – back to Lauren’s question earlier. A few examples. Just the Gillette business, innovation on the core with the Labs razor provides a growth driver.
But adding new jobs to be done, like female facial hair removal or male and female body hair removal, incremental jobs that when communicated appropriately of the benefit of the product drive incremental consumption. I mentioned Oral-B, penetration still low on the electric toothbrush. And as we’re converting more and more users, that drives incremental growth with more innovation, but also expansion of the lower-priced options of Oral-B i03, 4, and 5, and then the launch of Oral-B 10. Last example, I’ll give you and then I’ll let Jon add is Olay Super Serum. Just to cover a few of the categories here is a new serum. The most successful new serum in the category, 30% of those users are new to the category. So again, communication, strong innovation, premium propositions, and bringing new crews to the categories, is what’s driving that accelerated volume growth.
Jon Moeller: And I’ll just pile on. I agree with everything that Andre said. So just a couple more examples to show you again the breadth of the innovation that’s been commercialized currently. He talked about Olay very exciting innovation in our hair care business as well. An example, Head & Shoulders BARE, which is a more efficacious anti-dandruff offering with the Bare minimum number of ingredients, nine to be exact. In an eco-friendly package, 45% less plastic. And it’s one of the drivers of growth, particularly in North America on the Head & Shoulders brand which is up 8% fiscal year-to-date. Another example in a different category, Swiffer PowerMop, which is driving that business up 11% fiscal year-to-date and has built both volume and value of share at about 1.5 level so that’s…
And back to Steve’s question on complacency, this is what we need to keep doing and that’s why we talk about the best path forward being doubling down on exactly these things. They do drive market, they do drive volume, they do drive sales and they do it profitably.
Operator: The next question comes from Andrea Teixeira of JPMorgan. Please go ahead.
Andrea Teixeira: Thank you. Good morning. So I wanted to go back to that 4% volume growth commentary in the U.S. and 3% in the EU focus markets. And despite the tough comparison for the cold and flu season, it seems that you had market share gains in laundry and some other key categories. So can you comment on how you exited the quarter, for the cold and flu season in the U.S. and in Europe? And separately, have you – it seems that you secured more distribution in the balance of this fiscal year. So any comment on that? And a clarification on China, you said that you’re confident that the growth will resume to the mid-single-digit level. I’m assuming that’s not a comment for this fiscal year. But as you commented out, Jon, in terms of like the Head & Shoulder and I know hair care is a big category there and you’re comping easy comps in hair. So I was wondering if you can elaborate a little bit more than SK-II in particular? Thank you.
Jon Moeller: Let me just take China real quick and then turn it over to Andre. On the cough, cold trend, et cetera. The mid-single-digit number that we referred to, is an expectation of longer-term market growth. You’re correct. It is not an expectation of ours for either the market or our business in this current fiscal year. On the broader beauty question, when you take SK-II and the market impacts in China out of the equation. You see a business that’s performing extraordinarily well. I mentioned Head & Shoulders, which is the largest shampoo brand in the world up 8% fiscal year-to-date. If you look at North America, Pantene fiscal year-to-date up 15%. Our skin and personal care business up double-digits. The same is true for the beauty business in Enterprise LA and in Europe.
So it’s a very strong business benefiting from the exact same strategies obviously applied differently that we’re executing across the balance of the company. And that will, over time, as the market corrects itself, be demonstrated in China as well.
Andre Schulten: So on the other two questions on PHC, Andrea look the business is obviously very, very strong past for your average growth rate of 13%. So, the underlying strength of the business is very healthy. We see an impact of the core cost season. The season is still above average, but it’s below a record season last year and it’s developing a little bit slower in the current profile, which means there could be some upside coming – as time goes by. Last year Vicks was 28% in the same quarter, so you can see the high base that we mentioned in the prepared remarks.
Jon Moeller: Just one thing on that, sorry to interrupt, Andre – that I think is relatively straightforward, but it’s worth mentioning. As we were all coming out of COVID going through our first cough our – first non-COVID or like COVID, cough cold season, it’s not surprising having, but spent time in our homes for the last two to three years that the level of immunity was not high and therefore the level of incidence was very high. So that’s what we’re annualizing against combined with a slower start to the normal season. As Andre says, we’ll wait to see how that all materializes. We have seen some increase in incidence. You can probably hear a little bit of a frog in my voice this morning and I heard one in Andre’s.
