Generally, we’re always going to be supporting the businesses that need the help, so that would be vitamins, for example. But then you want to feed the strong as well. And we’ve got a lot of businesses that are on fire right now. So we’ll just pour it on in Q4.
Operator: The next question comes from Andrea Teixeira from JPMorgan
Andrea Teixeira: Thank you. Good morning, everyone. So I wanted to go back to the 4% organic guide for, the fourth quarter, I take another swing on that one. You said the 50-50 volume, Rick, would be even higher now in the fourth quarter. So it does imply a really much bigger step down in pricing. And I understand that with the discontinuing of some of the non-profitable promo that you had, that would imply that obviously you had pricing realization higher. So I was trying to see what is implied in your guide. And then related to that also in terms of pricing. And then related to that also, how long do you think it’s going to take? Because it seems as if you’re starting to lap those promos and reducing those promos at the trade, how long do you think this is going to linger for another three quarters into 2024?
Rick Dierker : Okay. Hey, Andrea. So I guess first of all, in my prepared comments I said we thought Q4 would be 1% or better on volume. So not half. And in Q3 it was better than half. But in Q4 we think it’s 1% or better. And part of that is because of some of the promotional pullback and discontinuing of promotions like I talked about. We don’t think that’s continues at all into 2024. Those are some discrete promotions we chose to not repeat in Q4. That’s the simple story.
Andrea Teixeira: And then any other, one of the things if we step back then strategically, if you have always told us, right, you have 40% of your portfolio in value, which implies obviously the other 60%, somewhere between mid-year to above. And of course the consumer is moving down. Is that like what we’ve been seeing now is that probably now we’re starting to feel it, right? It’s like it’s a race to the bottom in the sense that we’d rather not to have consumers trade down in general to you as well, because it’s like at the end of the day, you want to create growth and you want to work with your retailers to create growth in the category for innovation. So I was wondering if you can kind of like go back to both laundry and litter because you have on those categories you go across and it’s great, but in some ways, you also want to stop that movement in the sense that otherwise it’s going to lower the total value of the category.
So can you comment a little bit more on those two specifics as well as the other one which is the vitamin situation that I thought that at this point you would have lapped a lot of that impact and that retailers would give you back some shelf resets. And if you can comment on that for shelf resets into spring for vitamins next year.
Rick Dierker : Okay, so I would take that in two parts and I’ll start with the second one. On vitamins, we kind of just talked about that recently over the last quarter or two. It’s going to take a full 12 months to get back into the shelf position that we want to and all those tactics we talked through is what’s going to enable us to do it. So I know it feels like it’s been a long time but we’ve only been talking about that relatively for a short period of time. Your second question on trade down, I think Matt and I have been really clear over a long period of time the company does really well, our brand portfolio does really well in good times and in bad times and the value brands of course do better but even what you would call our mid-tier premium, it depends what category you’re in.
Most of our premium brands like THERABREATH or HERO are doing astonishingly, just fantastic. Yes, we do have some rise of private label in a couple categories but in general consumption is strong for the quarter end for October.
Matt Farrell: And Andrea, we feel great about having this sort of portfolio that gives consumers a choice and can trade down. The thing you’ve got to keep in mind too is if you look back at ARM & HAMMER Liquid Laundry, it has grown share just about every year that I’ve been here. Year after year in good times and bad times. So it’s not simply, yes, it gets accelerated when you have an economic downturn but what happens is people trade down, they discover the brand and they stick with it. That’s true for ARM & HAMMER Laundry now. If you go over to Litter, trade down between black box and orange box is great keeping consumer in the category and certainly when the economy recovers people trade back up to the black box.
Rick Dierker : And just one comment for everybody as we move forward because we’re starting to get a little tight on time. Let’s just try to keep it to one question and maybe one follow-up question.
Operator: The next question comes from Olivia Tong from Raymond James.
Olivia Tong : Great. Thank you. First on marketing, can you just talk about what is incremental in Q4 versus your prior expectations, what’s driving the 14% particularly if there’s a big change in certain categories and then your flexibility around that? Because if I remember correctly, Q3 and Q4.
Rick Dierker : We always thought it was we weighted more towards Q4. We did have some marketing shift out of Q3 and Q4 largely because of MPD support. Like even our laundry sheets, we sold out so fast that we wanted to make sure that the marketing was turned on and we had the supply. So we shifted some of that into Q4.
Olivia Tong : Got it. And then just laundry. Can you talk about the shape of your laundry portfolio because your first market with the sheets, which is obviously a premium price product. But then we’re cutting back on some promo, but also sounds like you’re benefiting from trade down. So how are you thinking about the positioning of your laundry portfolio premium versus mid-year versus sort of the opening price point with XTRA? How do you think about that longer term and then also just in the midterm as you embark on this next new category?
Matt Farrell: Well, if you look at the value detergent, there’s this value and there’s extreme value. So you’re right. XTRA is the extreme value. And ARM & HAMMER is the high end of value, maybe even the low end of mid-tier. And that has been a strategy for a long time. Pods is an area where we’re underrepresented and we only have a 4% share of pods. When in fact, in liquid laundry, we have a 15% share. Now, pod is unit dose, but since so is sheets. And sheets have an advantage in that it’s more sustainable, no more plastic jugs. So we do think that that’s going to help us gain even greater share in unit dose. Yes, I could cannibalize some ARM & HAMMER pods, but we do think it’s going to be attractive to anybody who’s using pods today because we don’t have the plastic pouches. This comes in a carton and people who don’t want to be carrying the big jugs anymore will migrate to sheets as well. So we think there’s a lot of positives by adding sheets to the portfolio.
