1
00:00:00,040 --> 00:00:02,120
Speaker 1: Dirt Band to put joining us right now. He's a

2
00:00:02,160 --> 00:00:05,680
Speaker 1: CEO and chairman over at Manda, Lize and Dirk. Everyone

3
00:00:05,720 --> 00:00:08,400
Speaker 1: wants to know about the potential impact of these weight

4
00:00:08,480 --> 00:00:11,280
Speaker 1: loss drugs on some of the snack foods that, of

5
00:00:11,280 --> 00:00:12,400
Speaker 1: course are your bread and butter.

6
00:00:14,280 --> 00:00:17,520
Speaker 2: Yes, that's a valid question, I would say, and from

7
00:00:17,560 --> 00:00:22,200
Speaker 2: our perspective, we've been studying this quite a bit. I

8
00:00:22,200 --> 00:00:25,680
Speaker 2: would say short term we see no effect whatsoever, and

9
00:00:25,760 --> 00:00:30,040
Speaker 2: even long term, assuming relatively high adoption rates of the

10
00:00:30,120 --> 00:00:34,800
Speaker 2: new drugs, looking ten years out, we think it's going

11
00:00:34,800 --> 00:00:38,680
Speaker 2: to have maybe half a percent, maybe one percent of

12
00:00:38,760 --> 00:00:41,080
Speaker 2: effect on the volume that we will have ten years

13
00:00:41,080 --> 00:00:45,120
Speaker 2: down the road, So very limited impact even at levels

14
00:00:45,120 --> 00:00:48,120
Speaker 2: of seven to fourteen percent of the US population being

15
00:00:48,159 --> 00:00:50,680
Speaker 2: on these drugs, which still remains to be seen. If

16
00:00:50,680 --> 00:00:53,000
Speaker 2: that is ever going to be the case, it's a

17
00:00:53,080 --> 00:00:55,200
Speaker 2: very big gift, to my opinion. So I think the

18
00:00:55,240 --> 00:00:59,440
Speaker 2: whole thing has been a little bit overblown. And even

19
00:00:59,640 --> 00:01:01,800
Speaker 2: if the period is ten years, we will have time

20
00:01:01,840 --> 00:01:06,319
Speaker 2: to adapt to launch a much more balanced portfolio shift

21
00:01:06,360 --> 00:01:10,199
Speaker 2: to healthier items if there would be an important effect,

22
00:01:10,280 --> 00:01:12,200
Speaker 2: But at this stage we do not believe that that's

23
00:01:12,240 --> 00:01:13,080
Speaker 2: going to be the case.

24
00:01:13,240 --> 00:01:14,880
Speaker 1: Yeah, and we should point out for our viewers. Of

25
00:01:14,880 --> 00:01:17,080
Speaker 1: course everyone knows you guys are for oreos and other

26
00:01:17,120 --> 00:01:19,080
Speaker 1: things like that, but of course you always have some

27
00:01:19,160 --> 00:01:21,440
Speaker 1: other healthy options out there, like cliff bars and a

28
00:01:21,440 --> 00:01:24,160
Speaker 1: few other things as well. I am curious about overall

29
00:01:25,240 --> 00:01:28,760
Speaker 1: how consumer demand is holding up for these products overall,

30
00:01:28,800 --> 00:01:31,319
Speaker 1: given that we've had at least anecdotal evidence of certain

31
00:01:31,360 --> 00:01:33,760
Speaker 1: consumers pulling back from some of that, I guess the

32
00:01:33,800 --> 00:01:37,399
Speaker 1: discretionary items on the grocery shelves. What has been the

33
00:01:37,440 --> 00:01:40,679
Speaker 1: effect on your brand specifically given that trend.

34
00:01:42,319 --> 00:01:46,560
Speaker 2: Yeah, I would look at volume trends here versus revenue

35
00:01:46,600 --> 00:01:49,120
Speaker 2: trends because there's been a lot of pricing. So the

36
00:01:49,240 --> 00:01:52,480
Speaker 2: categories we're in, which is biscuits, chocolate, and baked snacks

37
00:01:52,480 --> 00:01:56,400
Speaker 2: are flat globally volume wise, which is pretty good compared

38
00:01:56,400 --> 00:01:58,840
Speaker 2: to some of the other food items you were talking about.

39
00:01:59,160 --> 00:02:00,760
Speaker 2: And then if you look at us on the least,

40
00:02:00,760 --> 00:02:03,680
Speaker 2: we're up this quarter. We were up almost four percent

41
00:02:03,720 --> 00:02:06,280
Speaker 2: in volume mix. That is driven by the fact that

42
00:02:06,760 --> 00:02:09,640
Speaker 2: we've been supporting our brands quite extensively.

43
00:02:10,080 --> 00:02:11,559
Speaker 3: They're loved by the consumers.

44
00:02:11,560 --> 00:02:13,680
Speaker 2: They don't really want to shift to any other items,

45
00:02:13,720 --> 00:02:16,240
Speaker 2: and so that is a reflection of the high demand,

46
00:02:16,280 --> 00:02:18,840
Speaker 2: a strong demand that we're seeing from the consumer so far.

47
00:02:19,320 --> 00:02:21,680
Speaker 4: A lot of the snacks you mentioned that Romain mentioned

48
00:02:21,720 --> 00:02:23,800
Speaker 4: have chocolate in them. What are you doing to cope

49
00:02:23,840 --> 00:02:26,120
Speaker 4: with cocoa prices at forty four year highs?

50
00:02:27,720 --> 00:02:31,560
Speaker 2: Well, we of course will have to increase our prices

51
00:02:31,800 --> 00:02:35,120
Speaker 2: next year because the cocoa prices are almost eighty percent

52
00:02:35,200 --> 00:02:37,680
Speaker 2: higher than they were a year ago. So there's really

53
00:02:37,720 --> 00:02:41,639
Speaker 2: no other way than to apply a price increase. Now

54
00:02:41,680 --> 00:02:45,200
Speaker 2: coco goes up and down, and so I wouldn't look

55
00:02:45,280 --> 00:02:48,639
Speaker 2: too much for the long term into that, but short term, yes,

56
00:02:48,720 --> 00:02:51,400
Speaker 2: we see that inflation also on sugar, by the way,

57
00:02:51,800 --> 00:02:54,200
Speaker 2: and so while the rest of our input costs is

58
00:02:54,320 --> 00:02:58,359
Speaker 2: largely flat for next year, those two are really causing

59
00:02:58,440 --> 00:02:59,760
Speaker 2: us to have to increase prices.

60
00:02:59,760 --> 00:03:02,560
Speaker 4: Again, can you talk a little bit about the decision

61
00:03:02,600 --> 00:03:06,760
Speaker 4: to increase prices versus maybe shrinking the size of the packaging,

62
00:03:06,800 --> 00:03:09,960
Speaker 4: shrinking what each unit looks like. I mean, shri inflation

63
00:03:10,080 --> 00:03:12,680
Speaker 4: has been something that we've seen in the past. To

64
00:03:12,680 --> 00:03:15,840
Speaker 4: what extent is that an option in coping with higher

65
00:03:15,840 --> 00:03:17,240
Speaker 4: cocoa higher sugar prices.

66
00:03:18,800 --> 00:03:23,400
Speaker 2: Yeah, so we use this methodology called our GM Revenue

67
00:03:23,440 --> 00:03:27,560
Speaker 2: Growth Management, which is four key things. It's straightforward pricing,

68
00:03:27,680 --> 00:03:30,280
Speaker 2: it is playing around with the size of the packs.

69
00:03:30,480 --> 00:03:32,799
Speaker 3: It's also how much and how high.

70
00:03:32,680 --> 00:03:35,080
Speaker 2: You run your promotions, and then some of the other

71
00:03:35,560 --> 00:03:38,600
Speaker 2: factors that we have like in store presence and so on.

72
00:03:38,720 --> 00:03:44,280
Speaker 2: So the price indeed, or the cost increase of Coco

73
00:03:44,440 --> 00:03:48,280
Speaker 2: is so important that really eighty percent of what we

74
00:03:48,360 --> 00:03:49,920
Speaker 2: have to do is going to have to be through

75
00:03:49,960 --> 00:03:54,000
Speaker 2: a straightforward price increase. We will do a little bit

76
00:03:54,040 --> 00:03:57,760
Speaker 2: on the pack, but string inflation won'ts solve this inflation

77
00:03:57,840 --> 00:03:58,600
Speaker 2: at this stage.

78
00:03:58,840 --> 00:04:02,560
Speaker 1: How much more price increases do you think consumers can take?

79
00:04:02,600 --> 00:04:02,880
Speaker 4: Though?

80
00:04:03,040 --> 00:04:04,840
Speaker 1: I mean this came up on your conference call. It

81
00:04:04,880 --> 00:04:07,119
Speaker 1: came up on the conference call of some of your competitors.

82
00:04:07,360 --> 00:04:09,800
Speaker 1: This idea here that we have started to see a

83
00:04:09,880 --> 00:04:12,480
Speaker 1: decline in spending on some of these products, not because

84
00:04:12,880 --> 00:04:14,280
Speaker 1: of volume, but because of price.

85
00:04:16,080 --> 00:04:18,760
Speaker 3: Yes, it depends largely of the categories.

86
00:04:18,760 --> 00:04:23,039
Speaker 2: I would say, so our categories are affordable indulgences.

87
00:04:23,120 --> 00:04:25,040
Speaker 3: The out of pocket is not very high.

88
00:04:25,279 --> 00:04:29,640
Speaker 2: The consumers are very close to the brand's oreo chips

89
00:04:29,680 --> 00:04:31,760
Speaker 2: of hoy tobolerne, you name it.

90
00:04:32,640 --> 00:04:34,040
Speaker 3: They really like those brands.

91
00:04:34,080 --> 00:04:37,520
Speaker 2: They like the taste of those products, and so they

92
00:04:37,600 --> 00:04:42,280
Speaker 2: can absorb a certain price increase. As I was explaining,

93
00:04:42,360 --> 00:04:44,479
Speaker 2: so far, we haven't really noticed any effect on our

94
00:04:44,560 --> 00:04:48,400
Speaker 2: volumes into the country. I would say, so I assume

95
00:04:48,480 --> 00:04:50,599
Speaker 2: that this is going to be the last one next year,

96
00:04:50,600 --> 00:04:53,880
Speaker 2: that after that things will calm down a little bit

97
00:04:53,880 --> 00:04:57,720
Speaker 2: more inflation wise. But I do believe that for next

98
00:04:57,800 --> 00:04:59,840
Speaker 2: year we're still okay on the volume side of things.

99
00:05:00,240 --> 00:05:02,960
Speaker 1: We're obviously talking holistically about your company and your brands

100
00:05:02,960 --> 00:05:05,719
Speaker 1: as a whole. Are you seeing differences though, based on

101
00:05:06,080 --> 00:05:09,400
Speaker 1: the individual brands, based on the income level of the

102
00:05:09,440 --> 00:05:12,040
Speaker 1: consumer that would buy one brand versus the next. Are

103
00:05:12,040 --> 00:05:15,440
Speaker 1: their nuances there in terms of whether consumers are still

104
00:05:15,440 --> 00:05:16,880
Speaker 1: taking those price and those that aren't.

105
00:05:18,360 --> 00:05:21,640
Speaker 2: Yes, consumers react to the pricing increases in different ways.

106
00:05:22,000 --> 00:05:24,719
Speaker 2: For instance, in North America, what we're seeing is that

107
00:05:25,160 --> 00:05:28,480
Speaker 2: the consumers who have less income tend to shift their

108
00:05:28,520 --> 00:05:33,039
Speaker 2: spending towards some of the discount channels, clubs and so on.

109
00:05:33,880 --> 00:05:37,120
Speaker 2: They also tend to go more for multi packs, understanding

110
00:05:37,160 --> 00:05:40,200
Speaker 2: that the unit price goes down if you buy bigger quantities.

111
00:05:40,480 --> 00:05:44,120
Speaker 2: So they are adapting and changing the way they buy

112
00:05:44,760 --> 00:05:48,640
Speaker 2: not necessarily giving up on buying our brands, but they

113
00:05:48,680 --> 00:05:50,640
Speaker 2: do it in a more clever way, that's for sure.

114
00:05:50,680 --> 00:05:52,040
Speaker 3: Something we're seeing in Europe.

115
00:05:52,080 --> 00:05:55,320
Speaker 2: That reaction might be different where they're going towards smaller

116
00:05:55,960 --> 00:05:59,760
Speaker 2: packs and changing their frequency going to some of the discounters.

117
00:05:59,800 --> 00:06:03,359
Speaker 2: All so it's a shifting channel and shifting the size

118
00:06:03,400 --> 00:06:04,720
Speaker 2: of the pack that they're buying.

119
00:06:05,160 --> 00:06:05,360
Speaker 3: Turk.

120
00:06:05,440 --> 00:06:07,799
Speaker 4: We started off by talking about those weight loss drugs,

121
00:06:07,839 --> 00:06:10,720
Speaker 4: the GLP one drugs. Let's end there because I noticed

122
00:06:10,720 --> 00:06:13,480
Speaker 4: that you once worked at Novartist, the Swiss pharma company,

123
00:06:13,480 --> 00:06:16,880
Speaker 4: for about a year. From that industry's point of view,

124
00:06:17,440 --> 00:06:20,600
Speaker 4: how exciting, how meaningful development is this new class of

125
00:06:20,640 --> 00:06:21,640
Speaker 4: weight loss drugs.

126
00:06:23,440 --> 00:06:27,200
Speaker 2: Well, I assume I'm not in the pharmaceutical industry anymore,

127
00:06:27,240 --> 00:06:30,200
Speaker 2: but I assume it's very exciting. I think what they

128
00:06:30,240 --> 00:06:33,840
Speaker 2: see is a real potential of these drugs. I assume

129
00:06:33,880 --> 00:06:37,240
Speaker 2: that Ozempik will probably be the biggest drugs in drug

130
00:06:37,279 --> 00:06:41,200
Speaker 2: and history from a net revenue perspective, So for them

131
00:06:41,240 --> 00:06:42,359
Speaker 2: it's big.

132
00:06:42,520 --> 00:06:46,360
Speaker 3: I think the main thing will be keeping up with.

133
00:06:46,320 --> 00:06:50,080
Speaker 2: The capacity, having enough production capacity, making sure that the

134
00:06:50,120 --> 00:06:54,120
Speaker 2: side effects are not too important, and seeing if there's

135
00:06:54,200 --> 00:06:56,360
Speaker 2: real weight loss because we, for instance, know at this

136
00:06:56,440 --> 00:07:00,400
Speaker 2: stage that about sixty percent of the consumers are off drug.

137
00:07:00,480 --> 00:07:03,400
Speaker 2: After a year they regained about sixty five percent of

138
00:07:03,480 --> 00:07:03,920
Speaker 2: their weight.

139
00:07:04,279 --> 00:07:06,840
Speaker 3: So there's still a lot of unknown surrounding this.

140
00:07:07,520 --> 00:07:09,880
Speaker 2: That we will have to see, but for sure it's

141
00:07:09,960 --> 00:07:11,280
Speaker 2: good news for them

142
00:07:11,520 --> 00:07:13,760
Speaker 1: All right, Derek, really appreciate you taking time for us,

143
00:07:13,800 --> 00:07:16,840
Speaker 1: Dirk vand to put their CEO and chairman over at

144
00:07:16,880 --> 00:07:18,160
Speaker 1: Mandal's International