Dara Mohsenian: Okay, great. And then you touched on that you think you’re well positioned for consumer trade down. Are you actually seeing that? And then maybe also, can you just give us a sense of the promotional environment you’re seeing? Obviously, you touched on the laundry issue specifically, but just in general, the promotional environment.
Matt Farrell: Yes, look, the trade down, as I mentioned in my opening remarks in the litter class of trade, or litter category, we have a black box and an orange box and a black box is premium. The orange box is value. And so consumers are staying within the franchise trading down from black box to orange box. And it shows in our shares. So our shares are almost like 25% in litter. Your other question was more broadly with respect. Let me comment on laundry as well. I mean, laundry has, we’ve been doing trade down since beginning, I guess the middle of 2022, quarter after quarter. And this past quarter, liquid laundry grew with the category, but extra you see has started to grow. And that again is a sign of the times. It’s a deep value laundry detergent.
So once again, I think our portfolio was well positioned for a difficult economic environment. Of course, as long as unemployment stays low, people have jobs. We think that it’s going to, people are going to be discerning when they go shopping, but they have money in their pockets to shop. So I think the best value is going to win. When it comes to the promotional environment, liquid laundry, just to give you some numbers, round numbers, if you look at liquid laundry sold on deal in Q1, it was around 32%. And Q2 is like 33.5% and Q3 was 35%. So liquid laundry has been creeping up during 2023. So it’s around where you expect it to be pre-COVID. So it’s kind of all the way back. Same is true for unit dose. You look at unit dose sequentially Q2, Q3, 31% sold on a deal on Q2, 36% in Q3.
Now litter is a different story. I think it’s largely because of the difficulties that one of the competitors has had and has consequently pulled back on promotion. So the trend for litter Q1, Q2, Q3 is like a 15% in Q1, 14 .5% in Q2 and like 14.2% in Q3. So that kind of gives you a sense for the trend. I’d say in vitamins, it sequentially is up 200 basis points from Q2 to Q3. There are some competitors that are spending 55% sold on deal. It can’t make a lot of money that way, but it definitely does grab volume. But I think those four categories, liquid laundry. unit dose, litter, vitamins give you a sense for what’s going on in the promotional environment, Steve.
Operator: The next question comes from Lauren Lieberman from Barclays.
Lauren Lieberman: Great. Thanks. Good morning. I have a question about HERO. Hey, so in the past, I think you’ve talked about being focused on sort of acne related categories with HERO. But we’ve seen some press talks about you expanding into retinol and eye cream and balms and stuff. So just curious kind of where you stand on beauty overall. And just perspective there and start there.
Matt Farrell: Well, look, our number one objective is to win in acne and there’s some acne patches and also related products to acne. And that’s pretty broad. This is a really, really big category. And the opportunity for us to plan on launching in dozens of countries in 2024 with HERO. So we think this is just so much runway. And there still needs to be greater awareness of the patch form, which is another reason why we want to make sure we don’t get too much of our focus outside the patch category. Now, HERO is a fabulous brand. It resonates with consumers of all ages. We definitely do have the right and the permission to go to categories that are adjacent to acne. And yes, that could be in our future. But in the near term, the focus is on patches.
Lauren Lieberman: Okay. Great. And then just sticking with HERO and maybe my math is wrong, but just with it moving into organic, I guess in mid-October, it looks like it should add two to three points to organic sales growth in the fourth quarter. So I just wanted to make sure that was sort of roughly the right order of magnitude for thinking about this, and then just ask about sort of what that implies for everything else kind of decelerating sequentially. Frankly, is it conservatism or is there something you’re seeing that would support that modeling that deceleration? Thanks.
Rick Dierker : Hey, Lauren. It’s Rick, I would say our math does not lead to two to three points of organic contribution from HERO. Remember, there was sell-in to new retail distribution in Q4 last year for HERO. So from a comp perspective, it just doesn’t that much that you’re calculating. I think overall, we think consumption is still really strong in Q4. And October was off to a great start. I think Matt mentioned it was one of our highest shipment months ever in the history of the company. So we feel really good about our momentum right now. And we’ve made some choices to discontinue some promotions and I think that’s what kind of the nuance is for folks that they weren’t expecting.
Matt Farrell: Yes, and Lauren, it all depends on your perspective. Look, people, it depends on the narrative. Do you want to look at sequential Q3 to Q4? Do you want to look at just year-over-year and look at comps and say, what was in last year versus this year? But we have total confidence in where we sit right now with respect to the demand for the products as evidenced by such a strong October. So yes, we think we’ve got a good number for Q4. And yes, sometimes people accuse us of being conservative. But one thing is for sure about Church & Dwight is we take the long view. We don’t have short-term thinking. And I think that anybody listening to the call and certainly our long-term shareholders understand that we’re always palms up and try to make sure people, create understanding for not just you the analysts, but for our shareholders. And we’re really confident not only Q4, but in our future.
Operator: The next question comes from Anna Lizzul from Bank of America.
Anna Lizzul: Hi, good morning and thanks so much for the question. I wanted to ask on the higher marketing and investment spend; I think some of us were expecting you could potentially see a benefit in market share in certain categories like litter from a competitor’s disruption. And maybe that would provide some leverage on the investment side. So I was wondering if you could talk more about where you are investing in terms of marketing spend. and where you think you need the most support among your categories. Thanks.
Matt Farrell: Yes, you may be referring to litter. We threw some help from litter sales wise in Q3 and some of that will continue in Q4, but there’s lots of opportunities to invest when it comes to marketing. There’s not just the advertising. Remember, we had some new products we just launched like the laundry sheets, but sampling is another avenue for us. We’ve had remarkable conversion rates on sampling of, say, THERABREATH. We think also it can be true for laundry sheets. There’s non-working media as well that we can get after in Q4 to prepare for 2024. Over in R&D, there’s clinical trials that we can start earlier than expected for one product in particular that we’re looking at. It’s just a whole list of things that we can go after.
