Andre Schulten: Yes. Thanks, Olivia. I don’t think the fundamental dynamic in terms of consumers trading into the P&G portfolio and trading up is changing. We’ve not observed it over the past 2 years, and we’ve not seen it in the most recent period. There are some drivers and headwinds to mix. The biggest headwind I would mention is SK-II being down 30%. It’s our highest value per or one of the highest value per unit items, and that obviously has a material impact on mix. Outside of that, we really don’t see in any of the regions a significant down trading within our portfolio. As I mentioned, in the U.S., we continue to see trade up. Actually, the premium tiers on baby care doing better. I mentioned that in the context of Love.
So we continue to think that the way that we innovate, providing value with innovation and showing the superiority of our premium items in the portfolio is resonating with consumers. And as long as we do that and as long as that value is real and tangible for consumers, I think we can hold on to that mix trend that we’ve seen consistently.
Operator: The next question comes from Chris Carey with Wells Fargo Securities.
Chris Carey: Just regarding the, just one quick follow-up on the organic sales range for the full year. The slight change and I know the range is still in scope. Can you just frame maybe how much of that was the inventory dynamics in the U.S., maybe a little bit less pricing in Argentina versus anything that has fundamentally developed through the quarter? And just connected to that, if you could, you mentioned the elasticity dynamics in Baby and Feminine Care in the press release. Can you just comment on what you’re seeing from a broader perspective, specifically as you may need to contemplate some incremental pricing next year with the moves we’re seeing on the cost side?
Andre Schulten: Thanks, Chris. I think you gave the answer on the organic sales line. It’s exactly that. I think Argentina, as we said, peso requires a little less pricing. That’s an impact on organic sales, and the business is also smaller and responding maybe more aggressively to the pricing. So that is one building block. The other building block, I think is the biggest one is really the U.S. inventory reduction. So as I think about the step up that we need to see in order to be within that 4% to 5% range, we assume that that inventory reduction is a one timer, and that’s what we expect in the guidance range. The elasticity in general is not changing. I think we’ve done and you see it in the results, I think the teams have done a very good job of making sure that we maintain a healthy value equation for our retail partners and our consumers with strong innovation, with pricing, only pricing where necessary, balancing pricing with strong productivity.
So I do feel overall the business is responding very favorably even after we had to take the pricing that we took. The volume is coming up as we would have expected both in the market and for P&G. And in our biggest geographies, we’re growing volume share consistently. So I do feel overall the elasticity is doing well. Baby is a very elastic category. And especially, as I mentioned, if we’ve not been able to consistently innovate across all tiers. And that actually is a confirmation of the model. So where we’ve not been able to push the innovation out and hold the full level of superiority as we took pricing, the consumer is responding. And we know the answer to that, which is push the innovation that we know how to do and communicate as a priority, and I’m confident that we’ll recover the elasticity here.
I don’t see a broader issue. Actually, I see a lot of upside with the strength of the innovation pipeline going into next year.
Operator: The next question comes from Callum Elliott with Bernstein.
Callum Elliott: I wanted to come back please to Andrea’s question on trade down. I think, Andre, you had pointed to the stable private label market share as a sign that there is no trade down. And I want to push back on that a bit. I think we all know that the consumers under the most pressure at the moment are the low income consumers, many of whom were probably already using private label products in the first place. And so my question is, is it not possible that volume reductions and cutbacks amongst the low income cohorts sort of who were already using private label a year ago are offsetting the trade down impacts and sort of masking that trade down in that flat market share number that you’re talking about. And that could also explain why category growth has weakened so much.
And I guess just to add to the question, I’m surprised that the private label market share is the metric that you’re pointing to justify lack of trade down. And I’m just wondering, do you not track consumers longitudinally over time to measure trade down and what consumers are doing? And is private label market share really the best metric that we have to track this?
Andre Schulten: Look, I’d be worried that the phenomena you’re describing would be a driver if, A, the volume in the market wasn’t growing, which it is, and if we weren’t able to grow volume share, but only grow value share. So I don’t think that’s the case. We’re growing volume share. The market is growing in terms of volume. And one of the hypotheses I would have for you is that a lot of our consumers are actually not switching with private label heavily at this point in time. On the metrics that we use, look, private label share is the most visible metric that we can point to and it’s also visible to you. So it’s one that is convenient to use and objectively verifiable. So that’s why we’re using it. Internally, obviously, we use a lot more detail.
We track exact consumption by tier, by product form, by retail channel. We check our share versus competitive share at that level of detail. So there’s a lot more internal discussion on do we see trade down within our portfolio, do we see trade down across our portfolio with competitors to lower tiers. But private label is just the most visible and robust measure that we can point to that is visible to you guys.
