Michael Lavery: So, Howard, you’re around nine months in and came in with good momentum. So there wasn’t a broken business to fix. But as you have settled in now, what if any changes do you see as appropriate, and maybe specifically any shifts in marketing approach as well?
Howard Friedman: Thanks for the question, Mike. So yes, and I think I am probably the most grateful that the business was on a good footing when I got here and that it remains so today. Look, I think there are a couple of areas that I continue to look at and observe and believe that we can accelerate on the foundation that was established in the previous basically century of growth. The first is increasing our marketing spending thoughtfully, and that is largely from where I sit building brands both where consumers want to shop, whether it be retail media, or where they want to receive the message, which is primarily more in digital and performance based. So we will start to increase in those two domains over time. The second thing is in order to do that you need to really understand your consumer.
You need to understand the analytic rationale of what they’re doing and making sure what you’re doing is working. And probably the biggest change that I’ve made was the introduction of Jen Bentz to the company in innovation, insights and analytics. She brings a tremendous amount of capability in building that perspective for this company so that we can continue to invest where we want to be. And then the third area is I think that we are getting to the point where as we think about expansion, as we think about the role we play with consumers, we have businesses that consumers are very excited about in Zapp’s and Boulder Canyon and Utz, and making sure that those businesses get the appropriate level of attention while we manage the rest of our portfolio over time.
I’d be remiss to not mention Boulder Canyon as well. But making sure that we’re driving our drivers and being thoughtful about where we focus our time and energy. I think those are the big themes I would offer.
Michael Lavery: That’s great. And the marketing spend especially kind of segues perfectly into the other question I had on just the cost savings opportunity. I think you’ve mentioned in the past, but it looks like there was even a little bit more of an opportunity than you might have first imagined. You’ve got the accelerating productivity over the last few years, now this near 4% of COGS run rate in 2023. Could there even be more upside to that? Is that kind of the right baseline to think about as an ordinary year? Maybe what’s ahead in terms of if productivity can step up any further to help fund some of the marketing initiatives as well?
Ajay Kataria: I’ll take that. This is Ajay. So you’re correct. I think we are very pleased that our productivity program has stepped up and it’s running at about 4% of COGS right now. I think that’s our new baseline for at least a few more quarters, definitely for 2024. And with 4%, it should generate higher dollars in the next year. What gives us comfort that this program is going to stay elevated is the type of opportunity that we are seeing in several areas. So you’ve seen us do some network optimization work in sourcing, there is more to do there. Procurement is an area which we are just starting to explore, a huge opportunity for us. And we are doing some more work in that area. The team has built out the capabilities. Now they’re just getting started with the work stream itself.
And logistics, plants, all the opportunities within the boxes and within that network, that will continue. So huge amount of work going on in that area, lots of cost out opportunities. I will shamelessly do a plug. We’ll talk a lot more about it on December 15 when we meet for our Investor Day, so more to discuss on that.
