Andrew Wolf: Okay, Wendy, thank you. That’s very clarifying. And just the follow-up is also actually with the Veggie Burst launch. It sounds like the acceptance was strong. Did it – was the acceptance what you expected, or was it actually a little better? And if it was better, did that affect your marketing plan, or was it pretty much spot on and your marketing plan’s the same, just with respect to the launch?
Wendy Davidson: Well, I would say – and I encourage you to order the product. You’re going to love it. So, once we tasted the product and we saw the consumer research, we were very excited about it. To be honest, we expected to have large retailer acceptance, but I would say we are – we have almost 100% retailer acceptance across both Canada and the US. That gives us a lot of confidence as we go in. We’ve got a little bit more feature activity because of the strength of the launch that’s probably a bit more than we planned. So, what we did was, as Lee said, we’re leaning into the omnichannel marketing activity and that actually has us ramping up our investment in brand building in quarter three, which will be reflected as sort of the outlook that we have in the balance of the year, because we want to make sure that we’re appropriately supporting the innovation for a successful launch, both for our retail partners and for us.
Andrew Wolf: Okay. Thank you.
Operator: Thank you. Our next question comes from the line of Ken Goldman with J.P. Morgan Chase. Please proceed with your question.
Ken Goldman: Hi, thank you. With the understanding that the data that we get especially from some syndicated providers, does not really tell the whole story on Hain. Some of the numbers we’re looking at would suggest perhaps that the lifts that Hain is getting on some of its promotions may not be quite as strong as the company had hoped. I was just curious if you could comment on that, A, is that valid? And if not, I’d love to hear it. And, B, if it is valid, can you talk a little bit more about the decision to kind of invest more in the business, understanding also that not all those investments are of the promotion type of course.
Wendy Davidson: Yes. Good morning, Ken. That’s a great question and we’re seeing the same data that you’re seeing in measured channels, and I would say it depends on the brand. So, Terra has a very effective response to promotional activity, and that is allowing us to more effectively invest our trade behind Terra, both on feature and merchandising, as well as discounting of promotions that actually gets lift. So, feel very good about the plans that the team have on Terra and the response to that. Garden Veggie is a bit different. And what we’re finding is that the frequency of our promotions is more important than the depth of those promotions, and having feature activity both in our snack portfolio in the UK and feature activity in the US, are really important in the snack category.
So, as a part of our revenue growth management initiatives, the team is now using some really good data analytics to evaluate trade effectiveness, to make those adjustments, and then move forward. I feel better now because of those analytics that will allow us to increase the spend in the right way to move in the direction we need to, rather than a peanut butter approach across the trade. And that’s what you’ll see us reflecting as we go into the back half, is leaning into some of those ROI effectiveness decisions, rather than just leaning more dollars.
Ken Goldman: Great. Thank you. I’ll pass it on.
Operator: Thank you. Our next question comes on the line of Michael Lavery with Piper Sandler. Please proceed with your question.
Michael Lavery: Thank you. Good morning. Just wanted to come back to some of the channel expansion, and could you put the 10,000 new C-stores in context? I guess is that just the low hanging fruit and you feel like there’s some more wood to chop? Have you kind of made the rounds and that’s likely kind of the extent of the upside. How do you think about what the runway looks like there? And then you’ve touched on food service opportunities in the past. Maybe can you give an update of how that might be progressing as well?
Wendy Davidson: Yes, absolutely. Well, as we said on Investor Day and before, one of the reasons why we are very bullish on away from home and non-measured channels, especially for brands like ours, is we know that they’re beloved by the consumer, but they’re not available on the consumer sort of everyday shopping journey. It’s making them more available and accessible. So, putting them within arm’s reach of the consumer. To put it in in numbers, there’s about 160,000 C-stores. So, putting it into 10,000 C-stores is a good move for us, but it’s a starting move for us. In a retail environment, there’s about 28,000 points of distribution for retail. For food service, there’s about 2 million points of distribution. The dollars per point of distribution might be smaller, but they are then mentally available to the consumer.
They’re building the brand because you see them everywhere you’re going. That’s our goal is both to have it available when the consumer is in a big retail environment, but also to have it more aware as they’re moving throughout their day, throughout their week. So, C-stores is a growth vehicle. We’re seeing great growth, double-digit growth in the UK, as well as double-digit growth in the US, up 18% in snacks in the US alone in quarter two. In food service, we’re up high double digits as we’re getting some placements of brands like Garden of Eatin with commercial restaurant chains. We’re getting some of our yogurt products and some of our Celestial Seasonings tea placed where they’re on the consumers sort of moving throughout their day journey.
So, we feel really, really good that we’re getting early momentum in our away from home efforts.
Michael Lavery: No, that’s helpful. And just to follow up on some of the second half moving parts on the top line, can you give a sense for the SKU cuts or some of the geographic rationalization, just what either the timing or magnitude of that might look like. And similar for the Flavor Burst launch, just when we think about modeling in some of the pipeline fill and just to help us capture those pieces.
Lee Boyce: Yes. So, probably you’re not breaking out all those pieces specifically, but if you just think about kind of the adjustments that we made, we said for example, after the original guidance we gave, there was a percentage point pulled down due to FX. So, that’s one piece. Then the other pieces in there are obviously kind of the focus initiatives, as those are broken out. And I would say there is a kind of a bit of a third element in there is, we did see some kind of year-to-date performance deleveraging a little bit on some of the volume. So, I don’t think we are going to break out those pieces specifically, but you’ve got a percentage point, and then you can see the focus initiatives in the pull-forward is the other kind of the key element there.
Wendy Davidson: And if you thought in terms of timing, I think was your question, we will see ramp up in Flavor Burst in quarter three, and really hit stride as we get into quarter four. On the simplification initiatives, I think you will see the majority of that hitting in quarter four. And as Lee said, if you looked at our original guidance of two to four, you figure out a point of that that we pulled back is from FX, that’s different than what we originally planned, and I’d call it a point or two around the simplification is about how you’d look at that. I hope that helps.
Michael Lavery: That’s really helpful, yes. Thank you.
Operator: Thank you. Our next question comes from the line of Matt Smith with Stifel. Please proceed with your question.
Matt Smith: Hi. Good morning, Wendy. I wanted to ask a follow-up to your previous response about the impact from the focus pillar actions, the rationalization of SKUs and channels. You were talking about the predominance of the one point reduction of top line guidance beyond the FX adjustments being tied to those focus initiatives and those being concentrated in the fourth quarter. So, should we think of that as a mid-single digit headwind to revenue growth as we look out into fiscal ‘25 as you annualize the fourth quarter impact into next year? And should we think about SKU rationalization then hitting a normal cadence, or should there be incremental focus pillar actions in fiscal ‘25 as well?
Wendy Davidson: Yes, I wouldn’t look at it that way. We will feel it more discreetly in quarter four, but it won’t continue to carry out into fiscal ‘25. These are things that we had actually built in and layered into Hain Reimagined. And if you recall on Investor Day, we said that as we generated fuel, we would throttle forward and back because we’d be in a position to be able to do so. As we saw the effectiveness of brand building, we would also throttle forward and back. This is allowing us to just pull forward some of the things around, think of cleaning up inventory, stranded inventory of raw and pack, of SKUs that no longer need to exist in the portfolio, getting rid of some inventory finished goods in some of the SKU rad.
It’s working it through the trade. At the same time, we would expect, similar to what we saw in Joya, that harder working core to grow better. So, it shouldn’t be a straight one for one that carries on into the next year. It’s something you’ll feel discreetly in the quarter, and then you’ve got a better working core as we go into fiscal ‘25.
Lee Boyce: Sorry. Just to build on that. I mean, I think that is a key point. Just as a reminder, on the algorithm overall that was presenting Hsin Reimagined, it was 3% plus. But to Wendy’s point, part of that is streamlining with this winning portfolio. So, as you make some of these SKU rationalizations, it will be flow back to some of our existing products.
Matt Smith: Great. thank you very much. I appreciate the detail and I’ll pass it on.
Operator: Thank you. [Operator instructions] Our next question comes from the line of John Baumgartner with Mizuho Securities. Please proceed with your questions.
