But yes, we already see the fact that in Brazil when we reduced our yield as of today, is that, that flue-cured crop in Brazil has been already affected by 10%, and that is all related to farmer yield.
Ann Gurkin: Okay. Great. That helps. It’s nice to see the sequential improvement in the results for the Ingredients segment. Can you highlight the key factors that are driving that improvement? I know you referenced inventory — customers working through inventory levels. Is there anything else we can point to in terms of the recovery? And how should we think about that pace of recovery in the back half of the year?
Johan Kroner: It’s mainly just the normalization of demand really. And we’re working really hard on new business with new capabilities that will hopefully come online in the summer of next year in Lancaster, Pennsylvania where we’ll be able to do additional — produce additional products, different products, have additional capabilities there. We have told you already that SG&A is up because we have hired quite a few R&D people. We have hired quite a few commercial people to assist us in that effort. So that’s where we see all these things go and we were really positive. We’re happy that we finally see some of that — the stabilization in the market. So hopefully, that will continue, and we’ll just continue to have very good results for the Ingredient platform.
Ann Gurkin: So customer inventory levels at more balanced positions right now. Last quarter, you called out that the inflated inventory positions with customers. So where are you in that recovery?
Johan Kroner: Yes. What we are seeing is that certain customers are back. I’m not saying all because earlier in the quarter, we’re still a bit slow, and we’re still seeing some customers that are hesitant, but we certainly are out the worst of it, it it appears. And we hope that, that trend continues.
Ann Gurkin: So should we expect continued sequential improvement in profit and margin in the back half of fiscal — of the fiscal year?
Johan Kroner: We certainly hope so.
Ann Gurkin: That’s fantastic. That’s great. And then can you outline — you referenced this a little bit the investment in the sales force and the opportunities to cross-sell across the business — the Ingredient businesses. How should we think about potential revenue synergies over the multiyear period? What are you targeting for opportunities to cross-sell and drive higher top-line growth for these businesses?
Johan Kroner: Well, Ann, what we are trying to achieve here, we bought three separate businesses. What we’re trying to achieve through the additional commercial folks as well as the R&D platform to use, for example, an Apple beverage and put a flavor in that beverage, go to our customers and say, look, this is what we can produce. So that — those solutions base things we’re going to customers with instead of just going to them with some apple juice and say, why don’t you buy our apple juice? So we want to try to value up there, which will — should improve margins and then on top of that, of course, the investment that we are making in Lancaster, Pennsylvania at our Shank’s facility there will give us completely different capabilities that we did not have before.
So we have really high hopes for that. Again, we’re talking to customers about that, and that’s what we’re also using those R&D folks for as well as the commercial folks that are already going out today to try to sell some of that capacity that will come online, hopefully, in the summer of 2024.
Ann Gurkin: The shanks of vanilla. What are you adding? What else you’re adding?
Johan Kroner: It’s primarily vanilla. We do lots of extracts and botanicals at Shank’s. It’s not just vanilla, okay? They have a library of something 2,000 products that they can take but some of the things that our folks have pointed out to us is we can’t make these or we can make it better. So that’s where — why we have made the investment or making the investment in that facility to do some of those things that we believe will really enhance the platform.
