James Koch: So I can answer the first question. The idea is that we have — that we use our own internal brewers to full capacity. — and we use then our external comments for everything else that goes beyond that. Now the internal capacity, if you recall, will increase over time. That’s part of the gross margin improvement. We put a number of new lines and they’re running at low efficiencies. If we can get them up the sizable capacity increase that will happen internally in our breweries. But with that, even with that, we intend to run them at full capacity and everything else goes extra. Now within external, we’re also lowering the cost we have we have a partner on the West Coast that has very competitive prices. There’s improved variety packing capability that we will have in city that will lower the cost as well if the volume grows and we put more volume through the facility.
So again, the strategy is to use our own grows and then use the external breweries, but lower the cost in the external brewers. That’s the high-level strategy. The second question, I didn’t fully understand, to be honest, because the — so there’s — it was related to the open capacity that we had in our internal but but didn’t use because of volume, planning. I don’t want to specify that I think I told you on the Q4, we would have been middle of the — to high end of the gross margin range without those issues.
William Kirk: To clarify, the idea is, would you be doing more in-house, if not for the third-party commitment? Meaning would you bring some volume from those partners? but the fees if you did that are just too high and not worth it.
James Koch: No, I’m sorry. Thanks for clarification. No. The — internally, that’s the best incremental cost that we can get is in our internal facilities.
Operator: . The next question comes from the line of Gerald Pascarelli with Wedbush Securities.
Gerald Pascarelli: Mine is on the pricing outlook of plus 1 to 3 points. Just maybe if you could provide some more color on your decision to not take more pricing, in particular, given the continued margin headwinds and the increases that you were able to successfully pass through in — I guess like I know this is initial guidance, but as we look at it, just trying to understand if there’s upside to the pricing as we look out over the course of the year.
David Burwick: Yes. So on the pricing guidance, we have had with pricing in 2022. And as we said in previous calls, the — we try to cover the commodities, the increased commodities, the inflation, which we did successfully. So we’re happy with the pricing. There is — the additional pricing that you see is to the largest extent, is really carryover pricing that we implemented in 2022. At this point, we want to be careful — we’re planning to cover in 2023 any additional commodity increases. But we see, if you look at the total cost that we are exposed to, we see that environment moderating a little bit. I mean there are products that are going up, but there are other parts that are moderating. And at this point, we believe with the guidance that we have, we’ll be able to cover the incremental commodity costs. If that changes, we will revisit. But given also the competitive nature and like the consumer environment, we don’t want to overextend that.
Operator: And at this time, there are no further questions. I would like to turn the floor back over to Jim Koch for closing comments.
James Koch: Thank you, everybody, and we’ll speak in a few months.
Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.
