Operator: Next question comes from the line of Matt McKinley with Needham.
Matt McKinley: So you already stated that pricing isn’t expected to be a factor in top line growth this year. But could there be additional opportunities for price adjustments like you made in fourth quarter that would make your portfolio more competitive? And why was that price adjustment just limited to the fourth quarter? Was that a change in promotion that was a one-time thing in the fourth quarter? Or was that a long-term adjustment that was like a list price change that would potentially could reverberate through into the next year?
Howard Friedman: Yes. So a couple of things. One, I think we are pretty comfortable with our flat pricing assumption for the year. I think one of the things I would offer you is price pack architecture changes actually work in both directions, not just down, they can go up. But as we looked at things like pork and cheese, which had been opportunities for us, imagine a barrel the size of your head and you’re paying quite a bit more money, we had an opportunity to sharpen that price point so that we could maintain consumer value and expectations. So we made the choice. I think the other thing is, practically, we have customers who are interested in us and we’ve been partnering really well with and we want to make sure that we are getting opportunities to be able to drive the business and drive the distribution more broadly.
So there were a couple of investments that we made at the end of the year, which were really more about testing and probing to see what we could do with them that wound up actually having greater response overall than we would have necessarily expected. So look I think that pricing will likely not be a major contributor. We’re not doing anything with list at the moment. I think list is somewhat of a more brute force idea versus a better price pack architecture discipline where we maintain our price gaps and maintain our competitiveness.
Matt McKinley: And just a quick one on the CapEx guide. I just want to make sure I understand the nuance. So the average over the next three years is supposed to be 5%, but this year is a little bit higher than that at $80 million to $90 million, in ‘25 and ’26, you’re going to be more like $70 million or so?
Ajay Kataria: Yes. We’ll average out to 5% as we talked about at Investor Day. We are just simply putting forward some dollars into 2024.
Operator: Next question comes from the line of Jim Salera with Stephens.
Jim Salera: I wanted to ask on the advertising. I think we’re all excited to see what the brands can do with a little bit more ad support behind them. Can you maybe just give some color on the decision to — it sounds like the Midwest is the first beneficiary of that increased ad support? Just a thought around that as the market is just because it’s tangent to kind of your core market right now or anything that makes you particularly excited about the Midwest?
Howard Friedman: Yes, I’m sorry. Let me clarify that a little bit, Jim. I think what we expect is that our distribution expansion is really focused on the Midwest. Our advertising and consumer will support us and Zapp’s appropriately in across the markets and consumer bases that they are. So, we’re excited about the opportunity to increase the A&C and actually take these brands to a higher level of what I would consider more pull marketing emphasis. So, it’ll primarily start with Zapp’s and Utz and it will be a little bit broader than just it won’t specifically be to the Midwest. Retail media is obviously an important and consistent with our business over time and brands over night and brands over time, excuse me. And so, we’ll continue to invest in retail media as well with customers as we’re expanding our distribution. But pure consumer will be a little bit broader based than just the Midwest.
Jim Salera: Can you maybe give us keys a little bit of some of the messaging that we’re going to see in that? I mean, is an emphasis on kind of obviously Zapp’s is much more differentiated than a lot of brands. Is it kind of a value based messaging given the consumer constraints? Any color you’d go after there would be helpful.
Howard Friedman: Yes. It will not be value based messaging. What it will actually be much more of what is central and core to the brand. And so if you think about Zapp’s as a brand, as a flavor forward brand where consumers who come to the brand for high impact, high flavor. And it will be rooted more in its geography of origin. So think about New Orleans and the food scene and the flavor scene and the culture of New Orleans of which Zapp’s is a part of that will be more the emphasis. And then on Utz, I think Utz has got an incredible story to tell and it’s really around the quality and the care of what makes that brand different and special. And we’re going to spend the time really trying to explain a little bit more about the types of things that we do to make that brand eat and experience it much differently than some others do.
So more to come on it, but we’re very excited. It will be very much rooted in the, what is central to each of those brands and why consumers opt into it. And our goal over time is to again give these businesses a little bit of a push marketing. So, as our pull strategy over time evolves, we’re ready to continue to increase the A&C and drive the business overall.
Operator: And we do have our last question from John Baumgartner with Mizuho.
John Baumgartner : I wanted to come back to productivity savings. And could you speak to some of the larger variables there in terms of delivery in 2024 and maybe even beyond? How much the delivery rests on coordination with third parties for large streams? How much rests on continued volume growth that breeds the efficiency programs themselves? I’m just trying to better understand how your degree of visibility is and capacity to deliver relative to more dependency on exogenous variables that could drive some bottlenecks or volatility along the way?
Cary Devore: Hey, John, it’s Cary. I’ll take that. Great question. We’re very confident in our ability to deliver on our productivity. I mean, we’ve been building the program over the last several years. We’ve added a lot of talent and process into the initiative. So I think, delivery of productivity, I would say, is mostly under our control rather than reliant on exogenous factors. Couple of examples of where it’s going to come from, I mean, we get it across the system, but when you kind of look at incremental this year relative to last year, procurement is an area where we’ve invested in talent and analytics to really drive our numbers meaningfully higher in productivity delivery. We’ll see that this year. A lot of that’s been locked in, in terms of where we expect that to come from.
And then manufacturing, automation, but the incremental CapEx that Ajay spoke to, that will go toward automation as well. So there still remains plenty of opportunity across our supply chain to pull productivity dollars and we feel good about the delivery.
Operator: There are no further questions at this time. Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.
