Q4 2025 General Mills Inc Earnings Call - Q&A

Operator: Good morning and welcome to General Mills's fourth quarter fiscal 2025 earnings conference call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session.

Good morning, and welcome to General Mills, that's fourth quarter fiscal 2025 earnings conference call.

All participants are in a listen only mode. After the speaker's remarks, we will conduct a question answer session.

Operator: To ask a question at this time you will need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded.

To ask a question at this time, you will need to press star followed by the number one on your telephone keypad.

As a reminder, this conference call is being recorded.

Jeff Siemon: I would now like to turn the call over to Jeff Siemon, Vice President of Investor Relations and Corporate Finance. Thank you. Please go ahead. Thank you, Julianne, and good morning to everyone. Thanks for joining us today for our Q&A session on our fourth quarter fiscal 25 results. I hope everyone had time to review our press release, listen to our prepared remarks, and view our presentation materials, which we made available this morning on our investor relations website. Please note that in this morning's Q&A session, we may make forward-looking statements that are based on management's current views and assumptions.

Speaker Change: I would now like to turn the call over to Jeff Siemon, Vice President of Investor Relations and corporate finance. Thank you. Please go ahead.

Yeah.

Speaker Change: Thank you Julian and good morning to everyone. Thanks for joining us today for our Q&A session on our fourth quarter fiscal 25 results.

Speaker Change: I hope everyone had time to review our press release listened to our prepared remarks and view our presentation materials, which remain available. This morning on our Investor Relations website.

Please note that in this morning's Q&A session. We may make forward looking statements that are based on management's current views and assumptions.

Jeff Siemon: Please refer to this morning's press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call.

Speaker Change: Please refer to this mornings press release for factors that could impact forward looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call.

Jeff Siemon: I'm here today with Jeff Harmening, our Chairman and CEO, Kofi Bruce, our CFO, and Dana McNabb, Group President of North America Retail and North America Pet.

Speaker Change: I'm here today, with Jeff Harmening, our chairman and CEO Kofi Bruce our CFO and David Mcnab Group President of North America retail in North America.

Jeff Harmening: Before we open for questions, I'm going to hand it over to Jeff Harmening for a few opening remarks. Yeah, thanks, Jeff. And I thought I'd start this morning and there's a lot going on up and down our P&L within our business. And then, you know, certainly a lot going on in the broader world. So I thought I'd just take a couple minutes to summarize, you know, what we're trying to try to accomplish.

Speaker Change: Before we open for questions I'm going to hand, it over to Jeff Harmening for a few opening remarks.

Speaker Change: Thanks, Jeff and I thought I'd start this morning, there's a lot going on all up and down our P&L within our business and then certainly a lot going on in the broader world. So I thought I'd just take a couple of minutes to summarize what we are trying to try to accomplish.

Jeff Harmening: The first and most important thing is really returning to volume growth. specifically in NAR. And we're really encouraged by what we've seen. We started to invest in value in Q3 of last year with Pillsbury and Totino's, topped by really good advertising. And we liked the results of that so much that we decided that we'd expand the value investments we made in soup and cereal and fruit snacks in the fourth quarter. And we saw the results there that we expected. And so as we go into this year, we're kind of just continuing the formula we had in the fourth quarter, which is we should expand some of the value investments on targeted businesses that we saw.

Speaker Change: The first and most important thing is really returning to volume growth.

Speaker Change: Specifically in <unk>.

Speaker Change: And we're really encouraged by what we've seen we started to invest in value in Q3 of last year with the Pillsbury entertain those taught by really good advertising and we like the results of that so much that we decided that we would expand the value of investments, we made in soup and cereal and fruit snacks in the fourth quarter and we saw the results there.

Speaker Change: Ore than we expected and so as we go into this year.

Speaker Change: Kevin just continuing the formula that we had in the fourth quarter, which as we said to expand some of the value of investments our targeted businesses that we saw but also really importantly backing that up by a significant consumer news in fact, I think our new product news in our core renovation news is the best that I've seen since I've been CEO and we use a remarkable experience framework we talk.

Jeff Harmening: But also really importantly, backing that up by significant consumer news. In fact, I think our new product news and our core renovation news is the best that I have seen since I've been the CEO. And we use our remarkable experience framework. We talked a lot about these in our prepared remarks. So we are launching to fresh pet food, all the protein innovation we've seen in the NAR portfolio. renovating Häagen-Dazs stick bars and so forth, gives us confidence that we can get our business back to the kind of growth we're looking for. You know, importantly, as we're doing all this work in NARA, we did see share growth in our international businesses this past year, as well as food service and health care and pet.

Speaker Change: A lot about the use in our prepared remarks, certainly are launched into fresh pet food all of protein innovation, we've seen in our portfolio.

Speaker Change: Brian if any haagen dazs stick bars, and so forth.

Speaker Change: This confidence that we can get our business back to the kind of growth. We're looking for you importantly is where were doing all this work and nor are we did see share growth in our international businesses. This past year as well as foodservice.

Jeff Harmening: And so, you know, that gives us a lot of confidence. We're backing up all of this investment with record levels of holistic margin management and also productivity initiatives. So we're not sitting still on that front. But we know that it's an very confident that these investments will pay off, given what we've seen over the last couple of quarters.

Speaker Change: It held share in pet and so.

Speaker Change: That gives us a lot of confidence where we're backing up all of this investment with record levels of holistic margin management and also productivity initiatives. So we're not sitting still on that front, but we know that is an investment year, but we're very confident that these investments will pay off given what we've seen over the last couple of quarters, So with that let's open the floor to questions.

Jeff Siemon: So with that, let's open the floor to questions. Great, Julianne, you can go ahead. Thank you. As a reminder, to ask a question, please press star followed by the number one on your telephone keypad.

Julien: Great Julien can go ahead.

Speaker Change: Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad. Our first question comes from Ken Goldman from Jpmorgan. Please go ahead. Your line is open.

Ken Goldman: Our first question comes from Ken Goldman from J.P. Morgan. Please go ahead. Your line is open. Hi, good morning and thank you. You know, it's certainly exciting to see, you know, Blue go national from a refrigerated standpoint. You know, one of the things you had talked about previously in the past, to paraphrase, is, you know, you were always, I think, confident in the revenue opportunity. It was a little more on the margin and cash story that was, you know, less tested. So I'm trying to get a better sense, if possible, of, you know, if something has changed or you've learned a little bit more about the margin potential there.

Ken Goldman: Hi, good morning, and thank you.

Ken Goldman: It's certainly exciting to see.

Speaker Change: Blue go national from a refrigerated standpoint.

Speaker Change: One of the things you had talked about previously in the past to paraphrase. As you know you were you were always I think confident in the revenue opportunity. It was a little more on the margin and cash story that was less tested so I'm trying to get a better sense if possible of if something has changed where you've learned a little bit more about the margin potential there and then.

Ken Goldman: And then as a corollary to that, just trying to get a little bit of sense for your merchandising strategy for that, just given, you know, the obviously limited shelf space for that particular category.

Speaker Change: The corollary to that I'm, just trying to get a little bit of a sense for your merchandising strategy for that just given the obviously limited shelf space for that particular category. Thank you.

Jeff Harmening: Yes, let me let me talk a little bit about this.

Speaker Change: Yeah. So let me let me talk a little bit about this is Jeff Let me talk a little bit about the Pasadena view any follow on comments to follow up a little bit about our marketing plans, but yes.

Jeff Harmening: Jeff, let me talk a little bit about the past. And Dana, if you have any follow on comments to follow up a little bit about our marketing plans, but the we're very excited about this launch, this this big national launch, we learned a couple of important things in our last test market, you know, one was that the Blue Buffalo brand really resonated. The second we can make great products. So our repeat rates were really good. I mean, we had dogs standing in front of refrigerators because they were so excited to eat this stuff. So we know that that works.

Speaker Change: We're very excited about this launch this big National Law, we learned a couple of important bank is not last test market. One was that the blue Buffalo brand really resonate in the second we can make great products. So our repeat rates were really good I mean, we had a dog standing in our front end refrigerators because they were so excited to get this stuff. So we know that that works.

Jeff Harmening: What we what we didn't because we launched recently, we really didn't have the scale to market the way we needed to to generate trial. And so as we go into this national launch, this gives us the opportunity to to launch at scale, you asked about the financials, we have learned a lot.

Speaker Change: Well, we didn't because we launched reasonably we really didn't have the scale to market the way we needed to to generate trial and.

Speaker Change: So as we go into this national launch this gives us the opportunity to launch it at.

Speaker Change: At scale you asked about the financials, we have learned a lot. Its been there has been many years since we tried that test that we've actually been studying the market ever sense and one of the things we've grown quite a bit more comfortable with is that overtime. I mean, this investment will take a couple of years and generating trial. That's the most important job too.

Jeff Harmening: It's been it's been many years since we tried that that test. And we've actually been studying the market ever since. And one of the things we've grown quite a bit more comfortable with is that over time, this investment will take a couple of years and in generating trial, that's the most important job to do. But having done that, and achieving scale, we're confident that we can build a profitable and growing business. If we weren't, we wouldn't get involved in this endeavor. But it'll take a little bit of investment. But we believe that we have the right the right activities to do it.

Speaker Change: But having done that achieving scale, we are confident that we can build a profitable and growing business. If we weren't we wouldn't get involved in this endeavor.

Speaker Change: But it will take a little bit of investment but.

Speaker Change: We believe that we have the right the right activities to do or Dan do you want to give any insights into that yeah, well as you said under learning really helped us to build a stronger consumer proposition and we really think that we have a path to attractive financial model for our fresh business at scale.

Dana McNabb: And you want to give any insights into that? they use it with other food formats. So they'll top it, they'll mix it, they'll sometimes use it on its own. And then 55% of those users, they want to use kibble and fresh from the same brand. So we're really confident that Blue Buffalo has a right to win here that we've got a unique proposition. As Jeff said, we have improved our go to market approach, and we're committed to investing in building quality trial and awareness. We have had really strong reception from retailers. And as we come to market, we're going to be the biggest pet brand that's across dry across wet treats and fresh.

Speaker Change: We are coming with <unk> launching love made fresh nationally it will be in all 50 states. We have a wide variety of formats and flavors to drive at T. O and these formats have been designed for maximum flexibility and why that's important is if we know that 80% of pet parents, who use fresh they use it with other food format somehow top.

Speaker Change: That makes it sometimes even on its own and then 55% of those users they want to use Kimball and fresh from the same brand. So we're really confident that blue Buffalo has a right to win here. We've got a unique proposition as Jeff said, we have improved our go to market approach and we're committed.

Speaker Change: Investing in building quality trial and awareness and we have had really strong reception from retailers and as we come to market, we're going to be the biggest pet brand thats across.

Speaker Change: Across wet treats and fresh so we're still early days.

Dana McNabb: So we're still early days, but we're excited to share more about this launch as we get closer to the date.

Speaker Change: To share more about this launch as we get closer to the date.

Speaker Change: Yeah.

Dana McNabb: Great, thank you both.

Speaker Change: Great. Thank you both.

Andrew Lazar: Our next question comes from Andrew Lazar from Barclays. Please go ahead. Your line is open. Great. Thanks.

Speaker Change: Our next question comes from Andrew Lazar from Barclays. Please go ahead. Your line is open.

Andrew Lazar: Good morning, everybody. Morning. Jeff, I think, you know, the level of reinvestment plan for Fiscal 26 is certainly deeper, right, than most had anticipated, and I understand the organic top-line growth priority and the investment behind FRESH. My question is, how do you ensure that the margin profile that comes with this reinvestment is being done in a sort of responsible way, you know, rather than giving up too much margin that may be tougher to ultimately rebuild? I guess, you know, are there certain aspects of the reinvestment that maybe you see is more, you know, one-off or temporary in nature that give you confidence that you can rebuild this margin in a reasonable time frame, you know, versus being maybe at a structurally lower level, sort of, going forward, if you will?

Andrew Lazar: Great. Thanks, good morning, everybody.

Speaker Change: Good morning.

Speaker Change: Jeff I think the level of reinvestment plan for fiscal 'twenty six is certainly deeper than most anticipated and I understand the the organic topline growth priority and the investment behind fresh.

Speaker Change: My question is how do you ensure that the margin profile that comes with this reinvestment is being done in a responsible way rather than giving up too much margin that may be tougher to ultimately rebuild I guess are there certain aspects of the reinvestment that maybe you see is more one off or temporary in nature that give you confidence that you can rebuild this margin.

Speaker Change: In a reasonable timeframe versus being maybe at a structurally lower level sort of going forward. If you will thank you.

Andrew Lazar: Thank you.

Kofi Bruce: Sure.

Kofi Bruce: Andrew, this is Kofi. Good morning and thanks for the question. Let me give you just a few thoughts. I think we see a few of the factors. There's certainly a lot going on underneath the hood, and we provided a fair amount of that detail in the prepared remarks, but underneath the hood, there are a couple of factors that we would see as maybe more temporary in nature. First, as Jeff alluded to, the fresh investment, well, multiyear investment, we would expect that once we build scale, and we'll be at a point of profitability and return on that investment.

Speaker Change: Sure Andrew This is coffee and good morning, and thanks for the question. Let me let me give you just a few thoughts I think we see a few of the factors. There are certainly a lot going on underneath the hood and we provided a fair amount of that detail in the prepared remarks, but underneath the hood. There are a couple of factors that we would see is maybe more temporary.

Speaker Change: Nature.

Speaker Change: First as Jeff alluded to the fresh investment well, well multiyear investment and we would expect that once we build scale.

Speaker Change: And it will be at a point of profitability and return on that that investment second as we think about the nature of tariffs.

Kofi Bruce: Second, as we think about the nature of tariffs, we expect to be able to mitigate some of the effects of tariffs, but not all within the year, so that'll put a little bit of drag from a timing perspective. But again, not something that we see as structural necessarily long-term. And then third, just a reminder that on the divestiture of yield play, we expect there to be a little bit of stranded cost drag, as we are getting at some of the costs and eliminating some of those costs this year, but we'll have a tail end of fiscal 27.

Speaker Change: We expect to be able to mitigate some of the effects of tariff, but not all within the year. So that'll put a little bit of drag from a timing perspective, but again not something that we see as structural.

Speaker Change: Sure long long term and then third.

Speaker Change: Just a reminder that on the divestiture of Yoplait, we expected it to be a little bit of stranded cost drag as we are getting at some of the costs and eliminating some of those costs. This year, but we will have a tail end of the fiscal 'twenty seven. So those are the factors that I think are important to take in England as you measure.

Kofi Bruce: So those are the factors that I think are important to take in, even as you measure what is an important and significant investment behind getting growth restarted. Great, okay, thank you for that. Appreciate it. You bet.

Speaker Change: As an important and significant investment behind getting growth restarted.

Speaker Change: Got it great. Okay. Thank you for that I appreciate it you bet.

Peter Galbo: Our next question comes from Peter Galbo from Bank of America. Please go ahead, your line is open. Hey guys, good morning. Maybe just a quick clarification and then a question. Kofi, I think on on PET specifically in Q4, you know, you talked about the inventory bill that retail that you're expecting to reverse. So is that a full reversal in Q1? I just want to kind of understand the magnitude there. And then, Jeff, you know, like there's been obviously a lot of lumpiness, I think, in the reported figures on on PET. So maybe you can just give us a broader sense from your prepared remarks on the state of underlying PET and how you're thinking about the different verticals within that.

Peter Galbo: Our next question comes from Peter Galbo from Bank of America. Please go ahead. Your line is open.

Peter Galbo: Hey, guys good morning.

Peter Galbo: Maybe just a quick clarification and then a question.

Peter Galbo: I think on on pet specifically in Q4, you talked about the inventory build at retail that youre expecting to reverse that.

Peter Galbo: Is that a full reversal in Q1 I just wanted to kind of understand the magnitude there.

Jeff: And then Jeff.

Speaker Change: Like there's been obviously a lot of Lumpiness I think in the reported figures on on pet.

Speaker Change: So maybe you can just give us a broader sense from your prepared remarks on just the state of underlying Pat and how youre thinking about.

Speaker Change: The different verticals within that just again, given some of the lumpiness that we've seen quarter to quarter. Thanks very much.

Peter Galbo: Just, again, given some of the lumpiness that we've seen quarter to quarter. Thanks very. Yeah, thanks for the question.

Speaker Change: Yes. Thanks for the question you asked <unk>. The first one on me the second one, but I'm going to take one from the team here to answer both of those.

Jeff Harmening: You asked Kofi the first one and me the second one, but I'm going to take one for the team here and answer both of those. As we look at inventory levels, first, our inventory levels in PET are in a good place, kind of broadly speaking. As we looked throughout all of last year, there was relatively any, you know, very little movement as you look across the year in our levels of inventory at retail for our pet food business.

Speaker Change: The as we as we look at inventory levels first our inventory levels and pattern a good place kind of broadly speaking as we look throughout all of last year. There were relatively any very little movement as you look across the year and our levels of inventory at retail for our pet food business, our pet food business. Since we bought it has really had a lot more lumpiness as your term.

Jeff Harmening: Our pet food business, since we bought it, has really had a lot more lumpiness, is your term, in the levels of retail inventory. And that's really largely due to the fact that, you know, it has a high proportion of e-commerce sales, which tend to be more volatile than do things going through grocery stores and mass merchants and so forth. And so I would expect that the lumpiness quarter to quarter will continue. And to the extent, you know, we'll reverse it next quarter or not, you know, maybe. And we just want to be transparent about last quarter and that we saw three points of inventory build last quarter as we head into this quarter.

Speaker Change: The levels of retail inventory and that's really largely due to the fact that it has a high proportion of e-commerce sales, which tend to be more volatile than do things going through grocery stores and mass merchants and so forth. So.

Speaker Change: I would expect that that the lumpiness quarter to quarter, we will continue on and to the extent will reverse in the next quarter or not maybe and we just wanted to like we just wanted to be transparent about last quarter and that we saw three points of inventory build last quarter as we head into this quarter and whether that will dissipate at the end of this quarter or not we'll see.

Jeff Harmening: And whether that will dissipate at the end of this quarter or not, we'll see.

Jeff Harmening: One thing I have decided to do is to not predict what's going to happen with pet inventory from quarter to quarter, having been fooled a couple of times. So it's a fair question, but I want you to know there's, our inventory is in a good place, both on our retail business, our human food business, and our pet food business. And there's always going to be some level of variability as we go, as we go quarter to quarter. Great. Thanks, Jeff.

Speaker Change: One thing I have decided to do is to not predict what's going to happen with pad inventory from quarter to quarter, having been a couple of times. So it's a fair question, but you don't know there is our inventory is in a good place both on our retail business, our human food business and our pet food business and there's always going to be some level of variability as we go as we go quarter to quarter.

Speaker Change: Great. Thanks, Jeff and just anything on the underlying pad kind of performance Oh, yes, alright, So I got so excited about that answer.

Jeff Harmening: And just anything on the underlying pet kind of performance. Oh, yeah. Sorry.

Jeff Harmening: I got so excited about that answer. I forgot. I'm really excited. I'm really encouraged that we got our pet business, you know, back to stability. And we grew it a little bit this past year, and our share held. And some of the things we've done have really worked well, like the advertising on life protection formulas worked well. Our cat business is back to mid-single digit growth, and the cat population is growing. So that's important. We've integrated TikiCat effectively, and that's growing well. Edgar and Cooper is growing well in Europe and bringing back that to the U.S.

Speaker Change: I'm really excited I'm really encouraged that we've got our pet business back to stability and we grew it a little bit this past year and our share held.

Speaker Change: Some of the things we've done it really worked well to advertising on life protection Formula has worked well our cap businesses back to mid single digit growth in our cat population is growing so that's important we've integrated tiki cat effectively and Thats growing well Ed Gordon Cooper is growing well in Europe, and bringing back that to the U S. So we have a lot of things that are working really well I think pointed in the right.

Jeff Harmening: So we have a lot of things that are working really well, I think, pointed in the right direction. Our marketing is quite good in the pet food business now. There are some things we still have to work on. Wilderness improved, but it's not all the way back to bright. And certainly our treats business would be the same. But I like the direction of travel of our pet food business, even without this launch of fresh pet food. And it's important because, you know, our goal this year is to grow the core of our Blue Buffalo business and add this new, fresh launch on top of that.

Speaker Change: Our marketing is quite good in the pet food business from now there are some things we still have to work on wilderness improve but it's not all the way back to Brian and certainly our treats business would be the same but I like the direction of travel of our pet food business, even without this launch of fresh pet food and it's important because our our goal this year.

Speaker Change: As to grow the core of our Blue Buffalo business and add the add this new fresh loss on top of that.

Jeff Harmening: And we're encouraged by what we see. There's still more work to do, but we've gone from a business that had declined the prior year to one that we grew a little bit, and now we're looking to build on the successes and, you know, continue to work on the things that aren't working exactly the way that we had thought.

Speaker Change: We're encouraged by what we see there is still more work to do but we've gone from a business that had a decline in the prior year to one that we grew it a little bit and now we're looking to build on the successes and continue to work on the things that arent working exactly the way we had thought.

Jeff Harmening: Great, thanks very much.

Speaker Change: Great. Thanks, very much guys.

Peter Grom: Our next question comes from Peter Grom from UBS. Please go ahead. The line is open. Thanks, operator, and good morning, everyone.

Speaker Change: Our next question comes from Peter Grom from UBS. Please go ahead. Your line is open.

Peter Grom: Thanks, operator, and good morning, everyone I was just hoping to get an understanding.

Peter Grom: I was just hoping to get an understanding on just kind of the organic revenue phasing for the year, just in the context of the down one, the plus one, and kind of starting off, I think, in kind of this down 3% range. So just curious how you're thinking about the phasing of growth as you move through the year. And I guess specifically, do you expect to see a return to growth at some point in time? And then just related in the prepared remarks, you outlined an expectation for category growth to be similar and not to get too specific.

Speaker Change: Organic revenue phasing for the year just in the context of <unk>.

Peter Grom: On the plus one and kind of starting off taking kind of the three down 3% range. So just curious how youre thinking about the pacing of growth as you move through the year and I guess, specifically do you expect to see a return.

Peter Grom: Growth at some point in time.

Peter Grom: And then just related in the prepared remarks, you outlined an expectation for category growth to be similar and not to get too specific or are you simply assuming what we're seeing today continues or do you expect to see some sequential improvement, but where you land for the year ultimately is similar to what we saw in 'twenty five.

Kofi Bruce: Are you simply assuming what we're seeing today continues? Or do you expect to see some sequential improvement? But where you land for the year ultimately is similar to what we saw in 25. Thanks. Yep. So I think I think it's important to note that, you know, as we exit exit this year, we had about two points of trade expense phasing in our organic sales number as we exit the quarter. So as you think about kind of the setup for next year, we will have trade expense phasing comps as we work our way through the first half of the year.

Peter Grom: Yes, so I think it's important to note that.

Peter Grom: As we exit to exit this year, we had about two points of.

Peter Grom: Trade expense phasing in our organic sales number as we exit the quarter. So as you think about kind of the setup for next year.

Peter Grom: We'll have trade expense phasing comps as we work our way through the first half of the year.

Kofi Bruce: And obviously, as we as we made investments in the second half of this year, those those comps will ease. So I would expect that to be reflected in our progression of our top line. So I think that's a critical point.

Peter Grom: And.

Peter Grom: As we as we made investments in the second half of this year those those comps will ease so I would expect that to be reflected in the progression of our top line.

Peter Grom: So I think that's critical point and then the second is as we think about categories.

Kofi Bruce: And then the second is, is as we think about categories, we are we are laser focused on what we can control, which is our our competitiveness. So we're not counting on a significant rebound in categories as we work our way through the through the year.

Peter Grom: We're laser focused on what we can control, which is our our competitiveness. So we're not counting on a significant rebound in categories as we work our way through the through the year.

Peter Grom: Yeah.

Peter Grom: Okay.

Chris Carey: Our next question comes from Chris Carey from Wells Fargo. Please go ahead. Your line is open.

Peter Grom: Our next question comes from Chris Carey from Wells Fargo. Please go ahead. Your line is open.

Chris Carey: Hey, hey guys, how are you? I think kind of a holistic question that more of a quantitative follow-up. from the more holistic side. probably the most intentional when it comes to pricing reinvestments in the space. And I think. There's really a couple of questions related to that, you know, first...

Chris Carey: Hey, Hey, guys how are you.

Peter Grom: I think a kind of a holistic question then.

Peter Grom: More of a quantitative follow up from.

Peter Grom: From a more holistic side.

Peter Grom: Probably the most attention all weather.

Peter Grom: It comes to.

Peter Grom: Pricing reinvestments in the space.

Peter Grom: And I think that's really a couple of questions related to that first.

Chris Carey: What are you seeing from a competitive response to some of these early actions? And then secondly, you know, how do you, you know, ensure that this isn't a race to the bottom with, you know, branded competitors or private label?

Peter Grom: What are you seeing from a competitive response to some of these early actions and then secondly, how do you ensure that this is ed.

Peter Grom: Race to the bottom with branded competitors or private label.

Jeff Harmening: And then the more quantitative question is, you know, in the context of, you know, really strong HMM 5%, you've got the incremental $100 million of savings, but obviously, like substantial pricing reinvestments, can you just frame, you know, kind of like gross margins versus G&A, and how you see those line up, line up, stacking up through the year? Let me take the first part of that question, and then when it comes to margin versus SG&A, I'll pass it on to Kofi, and he can tackle that. On the pricing, it's a really good question, and I appreciate it.

Peter Grom: And then the more quantitative question is.

Peter Grom: In the context of really strong H M M, 5%, you've got the incremental $100 million of savings, but obviously.

Peter Grom: Pricing for investments can you just frame kind of like gross margins for <unk>, how you see those lineup stacking up through the year. Thanks, so much.

Peter Grom: Let me now.

Peter Grom: Let me take the first part of that question and then when it comes to the margin versus SG&A.

Peter Grom: I'll pass on the coffee you can you can tackle that.

Peter Grom: On the pricing.

Peter Grom: It's a really good question and I appreciate it.

Jeff Harmening: A couple of things to keep in mind is that the first is that even in the fourth quarter, as we looked at our price mix, it was down 3% in North America retail and down 1% We talk about pricing actions, and is it going to be a race to the bottom? It's not going to be a race to the bottom, and the order of magnitude is about that much. We're also investing a lot in advertising this coming year and new products and all the rest, so it's not just about pricing. It's about investment and making sure that we get trial on all of our good marketing initiatives.

Peter Grom: The things I think there are couple of things to keep in mind is that the first is that even in the fourth quarter as we as we looked at our price mix. It was down 3% in North America retail and down 1% as we can.

Peter Grom: Talking about pricing actions and it wasn't going to be raised the bottom is not going to be a race to the bottom in the order of magnitude is is about that much. We're also investing a lot in advertising this coming year and new products and all the rest. So it's not just it's not just about about pricing its about investment in making sure that we get trial on all of our good marketing initiatives.

Jeff Harmening: The other is that in every category, it's not as if we are leading pricing actions down across the board. We're taking targeting actions in specific categories. I've talked about this before, but just to really give another example, for example, in pet food, we were over a price cliff on our wet pet food, and we got under that price cliff, back in line with competition, but we didn't have any pricing action on life protection formula because that wasn't a good place, and the same with our cat food business. When we look across our categories, the actions really are targeted to specific items, specific areas, and specific categories, and really just to get us back in the zone of where our marketing is going to be effective.

Peter Grom: The other is that.

Peter Grom: And every category is not as if we are we are leading.

Peter Grom: Leading pricing actions down across the board, we're taking targeting actions and specific category as I've talked about this before but just to really give another example for example in pet food we were over our price cliff on our wet pet food and we got under that price class back in line with competition and but.

Peter Grom: But we didn't have any pricing action on life protection formula because that was in a good place.

Peter Grom: And the same with our cat food business and so.

Peter Grom: If we look across our categories. He actually has really are targeted to specific items specific areas of specific categories and really just to get us back into the zone.

Peter Grom: Our marketing is going to be effective and so our brands are generally premium brands and they should be because we've got great brands.

Jeff Harmening: Our brands are generally premium brands, and they should be because we've got great brands, but the marketing works really well when the price is in the zone, and getting that in the zone is the first step, but even more important than that, really, is having done that, how good is our marketing, how good are our new products, how good is our core news, and that's what we're really excited about because it's that combination of getting the pricing in, but then also making sure that your marketing is great on top of that that's going to lead to better outcomes, and we saw that with Pillsbury.

Peter Grom: But the marketing works really well when when the price is kind of in the zone in and kind of getting that in the zone is the first step, but even more important and that really is at once having done that.

Peter Grom: As our marketing how good are our new products. How good is our core news and Thats what were really excited about because it is that combination of getting the pricing in but then also making sure that you are marketing is great on top of that that's going to that's going to lead to better outcomes and we saw that with pillsbury, we saw that with <unk>.

Kofi Bruce: We saw that with Totino's. We're confident we'll see that with many of our other businesses as we head into this year. In fact, we already have. If you look at North America retail, we're just three weeks into the year, but I think about 80% of our North America retail business is gaining pound share already in this quarter. And on your question on SG&A, we would expect SG&A to grow a little faster than our top line as a result of reinvestment, a portion of the reinvestment going back into increased media behind our Fresh Pet launch and certainly behind our brands and innovation in North America retail.

Peter Grom: We're confident we'll see that with many of our businesses as we head into this year. In fact, we already have I mean, if you look at North America retail. Its just were just three weeks ended the year, but I think about 80% of our North America retail business is gaining pounds share already in this quarter.

Peter Grom: And then on your question on SG&A, we would expect SG&A to it too.

Peter Grom: To grow a little faster than our top line as a result of reinvestment of a portion of the reinvestment going back into increased media behind.

Peter Grom: Our fresh pet launch and certainly behind our brands and innovation in North America retail. In addition, just as a reminder, the incentive reset will be a big drag.

Kofi Bruce: In addition, just as a reminder, the incentive reset will be a big drag as you look at the corporate unallocated line in SG&A. So those factors will be the primary drivers of the increase.

Peter Grom: As you look at the corporate unallocated line in SG&A. So those those factors will be the primary drivers of the increase.

Jeff Siemon: I'll just add, this is Jeff Seaman, add one clarification. As Jeff said, our price mix in the quarter, North America retail and Nielsen was down about three points. And for the year for the quarter at the company level, excluding the trade timing price mix was down one. So I think that was that was the point down three in total, two of that was trade timing. So excluding trade timing, price mix was down about one in the quarter.

Jeff Siemon: I'll just add this is Jeff siemon add one clarification.

Peter Grom: As Jeff said, our price mix in the quarter, North America retail and Nielsen was down about three points and.

Peter Grom: And for the for the quarter at the company level, excluding the trade timing price mix was down one so I think that was the point down three in total two of that was trade timing. So excluding trade timing price mix was down about one in the quarter.

Peter Grom: Yeah.

Jeff Siemon: Okay, thank you, all three of you.

Peter Grom: Okay. Thank you Oh, thank you so much.

Peter Grom: Yeah.

Robert Moskow: Our next question comes from Robert Moskow from TD Cowen. Please go ahead. Your line is open. Hi, thanks for the question.

Speaker Change: Our next question comes from Robert Moskow from TD Cowen. Please go ahead. Your line is open.

Robert Moskow: Hi, Thanks for the question.

Robert Moskow: Jeff, I wanted to know if you think pricing can get back into positive territory at some point during the course of the year. You know, it's hard to get the algorithm to work without having some pricing power to some degree. So maybe you could talk about your philosophy in that regard.

Robert Moskow: Jeff I wanted to know if you think pricing can get back into positive territory at some point during the course of the year.

Speaker Change: It's hard to get the algorithm to work.

Robert Moskow: Without having some pricing power to some degree so maybe you could talk about your philosophy in that regard and then secondly, I wanted to ask about the assumptions on on how big the fresh business can get in pet when he started working on this the category was probably growing at around 25%, but our channel checks.

Robert Moskow: And then secondly, I wanted to ask about the assumptions on how big the fresh business can get in PET. You know, when you started working on this, the category was probably growing at around 25%. But our channel checks indicate that it's more like 12 to 13 now, including DTC. So does that have any impact on your expectations for how big this business can get longer term?

Speaker Change: Indicate that it's more like 12% to 13 now including DTC.

Speaker Change: So does that have any impact on on your expectations for how big this business can get longer term. Thanks.

Jeff Harmening: Yeah, so, so Rob, a couple questions, a couple answers to those really, really important questions. You know, on I'm about to tell you things that I know that you already know, because you've been doing this a long time as I have.

Speaker Change: Yes so.

Rob: So Rob a couple of questions a couple of answers to that was really really important questions.

Rob: I'm about to tell you the things that I know that you already know because you've been doing this a long time as have I am but over the long term.

Jeff Harmening: But, you know, over the long term, to get an algorithm to work in the food space, what you need is about half your growth from volume and half your growth from pricing. I mean, you get pricing and mix and all that. So you need you need both of those things over time.

Rob: To get an algorithm to work in the food space, where you would need is about half your growth from volume and half your growth from pricing I mean, you get pricing and mix and all that so you need you need both of those things over time, there's a period of time, there's a period of time, where we saw record.

Jeff Harmening: There's a period of time, there's a period of time when we saw a record and there's a dog in the background. I'm sure it's being fed blue buffalo. It's probably asking for blue. But if you look over time, you know, you need a mix of price mix and volume.

Rob: Just talking in the background.

Rob: I'm sure it's being fed Blue Buffalo is probably are asking for.

Rob: But if you look over time, you need a mix of price mix and volume we saw when we had record inflation for a period of about three years. All we had was pricing and there was no volume now we're at a little bit of a period, where there's a lot more volume than there is then there is price mix given the consumer sentiment.

Jeff Harmening: We saw when we had record inflation for a period of about three years, all we had was pricing and there was no volume. Now we're in a little bit of a period where there's a lot more volume than there is price mix given the consumer sentiment and kind of where we are. But over time, those things tend to level out. So you're right.

Rob: Where we are but over time those things tend to level out. So you are right over the course of time to get the P&L to really work. The way you wanted to you need a mix of.

Jeff Harmening: Over the course of time, to get the P&L to really work the way you want it to, you need a mix of pricing and you need a price mix and a little bit of volume as well. But this is a period where we're going to lead more on volume just as we did more on price mix when we had record inflation a few years ago. And so you're right, but we're in a period of time where we know what we need to do.

Rob: Pricing and need a fixed price makes it a little bit of volume as well, but this is a period, where we're going to lean more on volume just as we did on price mix. When we had record inflation a few years ago and so so you are right, but we are in a period of time, where we know we need to do in terms of what comes next.

Jeff Harmening: In terms of, you know, what comes next and tariffs and inflation, I mean, your guess is kind of as good as mine. I mean, what's going to happen with that, we're not really sure. I mean, all of our options are still open as to how we deal with the inflation we see in front of us. If inflation continues to pick up, then yes, we go to productivity and HMM and all those things. But we have a great strategic revenue management toolkit. And so, you know, we'll be very willing to work with that as well to the extent that we need to.

Rob: Tariffs and inflation I mean, your guess is kind of as good as mine I mean the.

Rob: What's going to happen with that we're not really sure I mean, all of our all of our options are still open as to how we deal with the inflation, we see in front of US if inflation continues to pick up then.

Rob: Yes, we go to productivity at HSN on all of those things, but we haven't we are a great strategic revenue management toolkit and so we'll we'll be glad we'll be we'll be very willing to work with as well to the extent that we need to and so but it's a pretty unpredictable environment right. Now. So we're not really sure how that's going to play out but know that we're agile enough with enough of the.

Jeff Harmening: But it's a pretty unpredictable environment right now, so we're not really sure how that's going to play out. But know that we're agile enough with enough of the capabilities to make that work.

Rob: <unk> capabilities to make that to make that work. Your second question about about fresh pet food you talked about the growth rates and how they've slowed to 12% I might add and and how we think about that the first ever say.

Jeff Harmening: Your second question about fresh pet food, you talked about the growth rates and how they've slowed to 12%, I might add, and how we think about that. The first I would say, you know, vis-a-vis where we started looking at fresh pet food a few years ago, the category is like twice the size. So the pool, the pond in which we'll be fishing in, will be about twice the size as it was a few years ago. So that would be the starting point, which gives us reason to believe that, you know, our fresh offering has a chance to be a really big offering.

Rob: Vis vis where we started looking at fresh pet food a few years ago the categories by twice the size.

Rob: So the pool of the Honda will be fishing and will be about twice the size as it was a few years ago. So that would be the starting point, which gives us reason to believe that.

Rob: Our fresh offering has a chance to be a really big offering and growing 12% is nothing to sneeze at and the continuation of Humanization of pets as an ongoing trend. It's a 20 year trend and it manifests itself in a lot of different ways versus how treating works.

Jeff Harmening: And growing 12% is nothing to sneeze at.

Dana McNabb: And the continuation of humanization of pets is an ongoing trend, it's a 20-year trend. And it manifests itself in a lot of different ways versus how treating works to wanting natural pet food, which Blue Buffalo serves, wanting, you know, fresh offerings, which we're about to get into. And so we're confident that this humanization of pet food is going to continue, especially because it's particularly relevant among Gen Z and millennial consumers. And so, you know, as they form households more and more and they bypass, we're confident that this trend will will continue.

Rob: Wanting natural pet food, which blue Buffalo serves wanting fresh offerings, which we're about to get into and so we're confident that the humanization of pet food is going to continue especially because.

Rob: It's particularly relevant among gen Z and millennial consumers.

Rob: So.

Rob: As they form households, more and more they bypassed we're confident that this trend will continue.

Dana McNabb: And the only thing I'd add to that is that the fresh segment is a $3 billion segment now. And our data indicates it'll be $10 billion in 10 years. And so there's still significant growth in this segment to get. We believe Blue Buffalo has a right to win here and it can help spur on that category growth.

Rob: The only thing I'd add to that is that the fresh segment is a $3 billion segment now and our data indicates that will be 10 billion in 10 years and so there is still significant growth in this segment to get we believe blue Buffalo right to win here and it can help spur on that category growth.

Dana McNabb: Thanks, Dana. Thanks, Jeff.

Speaker Change: Okay. Thanks, Dan Thanks, Jeff.

Speaker Change: Okay.

David Palmer: Our next question comes from David Palmer from Evercore ISI. Please go ahead. Your line is open. Thanks. First, a quick one and a clarification off of a line in slide number 38. You said category growth below long-term expectations and similar to fiscal. Page 9 of 9 What was your category growth all in for fiscal 25? I ask that because it looks like, lately, category growth on a... or Mills would be over 2% lately, just looking at the MULO Plus. https://www.youtube.com Hearteningly, the categories that you're in are... Well, so just curious about what sort of category growth assumptions you are.

Rob: Our next question comes from David Palmer from Evercore ISI. Please go ahead. Your line is open.

Rob: Thanks.

Speaker Change: First a quick one a clarification.

Speaker Change: Align in slide number 38, you said category growth belong below long term expectations and similar to fiscal 'twenty, five reflecting lower price mix.

Speaker Change: What was your category growth all in for fiscal 'twenty, five and and I ask that because it looks like lately category growth on a weighted basis for mills would be over 2% lately just looking at the <unk> plus <unk>.

Speaker Change: Data.

Speaker Change: Which would be in line with your Argo So it looks like.

Speaker Change: Heartening Lee the categories that you're in are doing pretty well. So just curious about what sort of category growth assumptions you are seeing.

Jeff Siemon: Hi, Dave, it's Jeff Siemon. Yeah, we that that references our global growth exposure kind of take our categories and geographies combined. And yes, in the US human food, I'd say our categories are a little bit shy of maybe where we would expect our long term growth to be with volume in line and and price mix not quite maybe to the to the level that we would have expected normally based on our, our go forward category. Pet food category wise is growing but modestly less than what we would expect long term, you know, maybe about 1% today, we'd expect three plus percent long term.

Jeff Siemon: Hi, Dave This is Jeff Siemon, yes.

Speaker Change: References our global growth exposure kind of Kevin take our categories and geographies combined and yes in the U S. Human food I would say our categories are a little bit shy of maybe where we would expect our long term growth to be with volume in line.

Speaker Change: And price mix not quite maybe to the level that we would have been.

Speaker Change: <unk> normally based on our go forward category.

Speaker Change: Mix pet food pet category wise is growing but modestly less than what we would expect long term, maybe it's about 1% today, we'd expect three plus percent long term and then some of our international categories, China in particular, and even Europe growing a bit less China down in Europe, maybe a bit less in long term. So when you take on that.

Jeff Siemon: And then some more international categories, China in particular, and even Europe growing a bit less, China down, and Europe, maybe a bit less than long term. So when you take that in aggregate, that was the remark about overall category growth across our enterprise being a bit below where we would expect long term that two to 3% growth rate.

Speaker Change: Aggregate that with the remark about overall category growth across our enterprise being a bit below where we would expect long term that 2% to 3% growth rate.

Jeff Harmening: So if we were to kind of keep it simple and thinking about your business in terms of getting your sales trends in line or better than your category. 26 versus 25, you know, for all of us, look, trying to think about whether How you're thinking about the must-get rights for this year, what categories and brands... perhaps we'll get the most improved awards. What are gonna be those? It looks like from your slides, you had a lot in snacks, to Tinos, maybe even cereal. You mentioned pets on firmer footing, but what are really gonna be the must-get rights from a total sales perspective that you're looking for improvement?

Speaker Change: So if we were to kind of keep it simple and thinking about your business in terms of.

Speaker Change: Getting your sales trends in line or better than your categories.

Speaker Change: 26 versus 25.

Speaker Change: All of US look trying to think about weather.

Speaker Change: How youre thinking about the musket rates for this year, what categories and brands.

Speaker Change: Perhaps we will get the most improved awards what are going to be those it looks like from your slides you had a lot in snacks to <unk>, maybe even cereal you mentioned pets on firmer footing, but what are really going to be the musket rights from a total sales perspective that youre looking for improvement into 2006.

Speaker Change: <unk>.

Jeff Harmening: Yeah, so let me take that. I'm kind of looking for improvement across the board, to be honest with you. And I think we can get there because our marketing is better, our new products are better, our value is going to be in the right place. And I mean, we win when our biggest, most important categories get better. And so as you look across our global brands and our local gems, that's where we expect to see the improvement. I mean, you can't really get the growth we're kind of looking at by growing your small businesses really well.

Speaker Change: Yes, So let me let me take that I'm kind of looking for improvement across the board is to be to be honest with you.

Speaker Change: And I think we can get there because our marketing is better our new products are better our value is going to be in the right place then.

Speaker Change: We win when our biggest most important categories get better and so as you look across our global brands and our low local Jeremy that's where we would expect to see the improvement I mean, you you can't really get the growth we're kind of looking at by by growing your small business is really well you really need to grow your biggest most important business as well that's why.

Jeff Harmening: You really need to grow your biggest, most important business as well. That's where I would expect to see improvement, but I would also expect to see a broad base. And I think we have the initiatives to back that up. And we feel good about the starts of the year, and we'll see how it progresses. But so far, I would say that, importantly, what we have to do is grow in line with our categories. We think if we do our job right, we can hopefully get our categories to grow a little faster, but we're not counting on that.

Speaker Change: I would expect to see improvement, but I would also and expected to see a broad based and I think we have the initiatives to back that up and.

Speaker Change: We feel good about the start to the year and we'll see how it progresses, but so far I would say that importantly, but we have to do is grow in line with our categories. We think if we do our job right. We can hopefully get our categories to grow a little faster, but but we're not counting on that we're counting on is just being more competitive within our categories, but because of we're the leader in so many cats.

Jeff Harmening: What we're counting on is just being more competitive, within our categories, but because we're the leader in so many categories, to the extent that our marketing efforts really stick well, hopefully we can drive a little bit more improvement in category growth as well, but we're not counting on that.

Speaker Change: To the extent that our our marketing efforts are really stick well hopefully we can drive a little bit more improvement in category growth as well, but we're not counting on that.

Speaker Change: Okay. Thank you.

Scott Marks: Our next question comes from Scott Marks from Jeffreys. Please go ahead, your line is open. Hey, good morning, guys. Thanks so much for taking our questions. I have two quick ones. The first, I guess, on the innovation front, I guess we saw a lot of products that are putting protein front and center. So just wondering how those are performing thus far and kind of initial launches and markets where you're getting into. And then secondly, on the price investment front, we've heard some of your competitors speak to investing around the world. around key events, the key seasons, as opposed to more kind of steady state investment.

Speaker Change: Our next question comes from Scott <unk> from Jefferies. Please go ahead. Your line is open.

Scott: Hey, good morning, guys. Thanks, so much for taking my questions.

Scott: Two two quick ones. The first I guess on the innovation front I guess, we saw a lot of products that are putting protein front and center. So just wondering.

Scott: How those are performing thus far and kind of initial launches in markets, where youre getting into and then secondly on the.

Scott: Price investment upfront.

Scott: We've heard some of your competitors.

Scott: Okay.

Scott: Yes.

Scott: As opposed to more kind of steady state.

Scott Marks: So just wondering how you're thinking about that and whether you see different consumer responses throughout the year at different points in time. Thanks so much. Yeah, so I think from a new product standpoint, or a new standpoint, you're absolutely right. Protein is a trend that people are really looking for right now. We see mid- to single-digit growth across the grocery store from protein items. And while I'm biased, we make protein taste incredibly good. So what you're going to see in the plan coming this year is almost $100 million worth of ideas. We have really strong protein across most of our big categories.

Scott: So I'm just wondering how youre thinking about that and whether you see different consumer responses throughout the year.

Scott: Thanks, so much.

Speaker Change: Yes, so I think from a from a from a new product.

Speaker Change: Product standpoint, or a new standpoint, youre absolutely right protein is a trend that people are really looking for right now we see mid single digit growth across the grocery grocery store from protein items and while I am biased we make protein tastes incredibly good so what youre going to see in the plan coming this year and almost $100 million worth of idle.

Speaker Change: We have really strong protein across most of our big categories I'll use cheerios protein as an example, that's only been in the marketplace for six months and has far exceeded our expectation. So we are bringing new skus into the marketplace. Starting now so we really believe that this is a trend that is here to stay and that we are well positioned to win.

Scott Marks: I'll use Cheerios protein as an example. That's only been in the marketplace for six months, and it's far exceeded our expectations. So we are bringing new SKUs into the marketplace starting now. So we really believe that this is a trend that is here to stay, and that we are well-positioned to win with this trend.

Speaker Change: With this trend.

Scott Marks: So that is how we're thinking about new products. and then Bryce, steady state versus kind of season. Right. I mean, as Jeff has said, the plan for this year is really to make sure that we have really the right price value, and then very strong news innovation and advertising across the entire year. But we also know that when the consumer is struggling, parents won't sacrifice spending in the seasons. They want their families to have a good Halloween or a good Valentine's. And so we will make sure that we are leveraging seasons where appropriate. We have about 50% more seasonal innovation in our plan this year, and I think that will be important to complement the innovation and news that we have throughout the entire 52 weeks.

Speaker Change: So that is how we're thinking about new products.

Speaker Change: And then pricing state versus kind of seasonal.

Speaker Change: Right.

Speaker Change: As Jeff has said.

Speaker Change: The plan for this year is really to make sure that we have.

Speaker Change: Really the right price value and then very strong news innovation and advertising across the entire year, but we also know that when the consumer is struggling parents won't sacrifice spending in this season as they want their families to have a good Halloween or a good Valentine's and so we will make sure that we are leveraging seasons where appropriate.

Speaker Change: We have about 50% more seasonal innovation in our plan this year and I think that will be important to complement the innovation that we have throughout the entire 52 weeks.

Max Gumport: All right, thank you.

Speaker Change: Alright, thank you.

Max Gumport: Our next question comes from Max Gumport from BNP Paribas. Please go ahead. Your line is open. Hey, thanks for the question. You're clearly stepping up your investment posture as you're prioritizing turning volumes positive. And it's nice to see that in the platforms that you started investing earlier, like refrigerated dough and patinos and dog food, you're seeing that improved volume performance. The question is, though, taking refrigerated dough as an example, that improved volume is not outpacing the price decline. So even though refrigerated dough is a great example of a place where you've turned volumes positive, dollar sales really are.

Speaker Change: Our next question comes from Max <unk> from BNP Paribas. Please go ahead. Your line is open.

Speaker Change: Okay. Thanks for the question you are clearly stepping up your investment posture as Jarrod prioritizing turning volumes positive and it's nice to see that.

Speaker Change: Platforms that you started investing earlier like refrigerated dough and Latinos in dog food Youre seeing that improved volume performance.

Speaker Change: The question is though taking refrigerated dough as an example, the improved volume.

Speaker Change: Outpacing the price decline, so even though refrigerated dough is a great example of a place where you can turn volumes positive.

Speaker Change: Dollar sales really are still struggling at least in the Nielsen data, we're looking at and given the midpoint of your guidance calls for flat organic sales growth I'm trying to get a sense for what's giving you the confidence that in.

Jeff Harmening: Thank you. Yeah, so you're right, Max. The fact that our volumes have increased ahead and our volume shares have increased ahead of our dollar shares is certainly true. And it's something that we expected and something that we had modeled. In fact, the modeling that we did, it turned out to be very, very accurate to what has actually transpired. But the modeling doesn't just end with how you invest in price. What we would expect is that over the course of the first half of this coming year, that our volume shares will outpace our dollar shares for the very reasons that you talked about.

Speaker Change: These as you rollout these investments more fully youll see a more favorable relationship between volume and price. Thank you.

Speaker Change: Yes, so you're right Max the fact that our volumes have increased.

Speaker Change: Our volume shares have increased ahead of our $1 shares is certainly true and it's something that we expected and something that we had model in fact that the modeling that we did just turned out to be very very accurate to what has actually transpired.

Speaker Change: The modeling doesn't always doesn't just end with how you invest in price. The what we would expect is that.

Speaker Change: Over the course of the first half of this coming year that our volume shares will outpace our dollar series for the very reasons that you've talked about that's why it's so important that as we get into the second half of the year and particularly the fourth quarter, but starting in the starting in the second half of the year that you know that we keep our marketing investment.

Jeff Harmening: That's why, though, it's so important that as we get into the second half of the year, particularly the fourth quarter, starting in the second half of the year, that we keep our marketing investment up, that we've improved our new product profile. Our new products are up 25%. That would be our expectation of North American retail and 30% overall as a company. And why we have more core news, because once we allowed the pricing, our assumption is that our dollar shares would then begin to grow. And that really happens when you get your investments in the right zone on value.

Speaker Change: That we have improved our new product profile of our new products are up 25%, that's what that would be our expectation that north American retail at 30% overall as a company.

Speaker Change: And why we have more core news because once we lap the pricing our assumption is that our $1 shares would then begin to grow and that really happens when you get your your investments in the right zone on value, but then when you add on top of that really good marketing, which we have and so the first half of the year.

Jeff Harmening: But then when you add on top of that really good marketing, which we have. And so the first half of the year, we would expect that our volume growth will outpace our value growth, our sales growth.

Speaker Change: We would expect that our volume growth will outpace our value growth or sales growth.

Jeff Harmening: But then that will start to reverse as we continue to invest in new product marketing and great advertising and core business. Great, thank you.

Speaker Change: But then that will start to reverse as as we continue to invest in new product marketing and great advertising and core core business news.

Speaker Change: Great. Thank you and your guidance, it's clearly embedding a pretty big step up.

Jeff Harmening: In your guidance, it's clearly embedding a pretty big step up in investment spend at net 526. And it feels like a portion of that is around the national expansion into fresh pet food.

Speaker Change: Investment spending.

Speaker Change: <unk> six and.

Speaker Change: It feels like a portion of that is around the national expansion into fresh pet food Theres any way you could quantify.

Jeff Harmening: Is there any way you could quantify just how much investment is going behind that national expansion into fresh pet food? And I'll leave it there.

Speaker Change: Just how much investment is going behind that national expansion into fresh pet food and I'll leave it there. Thank you very much.

Jeff Harmening: It's a fair question, but we're going to pass on that for now. Just know that this is not a test market. It's a national launch, and we fully intend to make pet parents aware of this launch. With our marketing investment, we're going to spend the money required to get the trial, because we know the repeat is going to be really good. And so we're not going to give a number on that. But just know that it's important to get the trial. And that really comes with good marketing, but significant levels of marketing investment. Okay, thanks very much.

Speaker Change: It's a fair question, but we're going to we're going to pass on that for now just know that there is.

Speaker Change: The test market is a national launch and we fully intend to make.

Speaker Change: So where are those loans with our marketing investment we're going to we're going to spend the money required to get the trial because we know we know that repeat it's going to be really good and so we're not going to give a number on that but just know that it's important to get the trial and in.

Speaker Change: And that really comes with.

Speaker Change: Good marketing, but but significant levels of marketing investment.

Speaker Change: Yeah.

Speaker Change: Okay. Thanks very much.

Michael Lavery: Our last question today will come from Michael Lavery from Piper Sandler. Please go ahead, your line is open. Thank you, good morning.

Speaker Change: Our last question today will come from Michael Lavery from Piper Piper Sandler. Please go ahead. Your line is open.

Michael Lavery: Thank you good morning.

Michael Lavery: Two quick ones, maybe just following up on the launch spending comment, can you give a sense of how you evaluate and balance? organic innovation versus acquiring a fresh pet business. And obviously, the consideration set is extremely limited to go acquire. But how do you just think about which is the better way to go? Or what drove you to come back after a test a couple years ago to launch? Yeah, the... Look, in general, the ways to grow your own brands organically, to buy your way into growth through M&A, which we've also done successfully, or use equities that other people have to enter categories that we have with G.O.A.S.T.

Michael Lavery: Good morning quick ones, maybe just following up on on the launch spending comment can you give a sense of how you evaluate and balance.

Michael Lavery: Organic innovation versus.

Michael Lavery: Acquiring a fresh pet business.

Michael Lavery: Obviously, the consideration set is extremely limited.

Michael Lavery: To go acquire but how do you just think about which is the better way to go or what drove you to come back after a test a couple of years ago to launch now.

Michael Lavery: Yes.

Michael Lavery:

Michael Lavery: No.

Speaker Change: Look in general the waves of growth or grow your own brands organically to Bayou and to grow through M&A, which was also done successfully.

Michael Lavery: Or use equity as other people have to enter categories that we have with ghost in cereal for example on the four for protein and we've done all three of those things effectively and so.

Jeff Harmening: and cereal, for example, for protein. We've done all three of those things effectively, and so as we think about what profile to take, we ask ourselves, do we have the right to win to do this organically? And with Blue Buffalo, the answer is a resounding yes. We found that out during the first phase of the trial. The second is, do we have the capabilities in order to win? And, you know, we've been doing refrigerated products since, like, the beginning of time, I think since the 50s. So, you know, this idea of getting refrigerated, we know how to run a refrigerated network, and so we certainly know how to do that.

Michael Lavery: As we think about what profile would take we ask ourselves do we have the right to win to this organically and it was Bruce Blue Buffalo. The answer is a resounding, yes, we found that out during the first phase of the trial. The second is do we have the capabilities in order to win and we've been doing refrigerated refrigerated products since the beginning of <unk>.

Michael Lavery: I think since the fifties.

Michael Lavery: So this idea of getting a refrigerated we know how to run a refrigerated network and so we certainly know how to do that and then we look at the investment profile and do we think we have the investment profile to to be able to enter a category successfully in <unk>.

Jeff Harmening: And then we look at the investment profile, and do we think we have the investment profile to be able to enter a category successfully? And in this case, we think we do. And so that's what we evaluate as we look at all of our growth opportunities. We like to be able to grow organically. That's the most important thing for us to do. But we're really pleased that we think we have an offering in this case that will be significant, that will be innovative, that ties really well with the Blue equity.

Michael Lavery: In this case, we think we do and so that's where we evaluated as we look at all of our growth opportunities that we'd like to be able to grow organically. That's the most important thing for us to do but we're really pleased that that we think we have an offering in this case that will be a significant that will be innovative that ties really well with the blue equity.

Jeff Harmening: But, you know, in other areas, you've seen us do M&A over time because we felt like we needed to enter a category like we did with Blue Buffalo originally, and thrilled that we did that. I know that's a couple.

Michael Lavery: And.

Michael Lavery: In other areas, you've seen us do M&A over time, because we felt like we needed to enter a category like we did with Blue Buffalo originally.

Michael Lavery: I'm thrilled that we did that.

Michael Lavery: Okay.

Michael Lavery: And could I just come back to one other comment you said about, you know, hoping for improvement across the board.

Michael Lavery: Helpful.

Speaker Change: Can I just come back to one other comment you said about.

Speaker Change: Hoping for improvement across the board.

Jeff Harmening: Where does Salty Snacks fit into that? It didn't really get much mention. I know it's a smaller piece of the portfolio, but is that just more challenged because of a discretionary component or some reason that... It isn't maybe getting some of the same investments, or how does that just fit into your thinking and strategy? Yeah, so thanks for the question. What I would say for snacks broadly overall in a tough economic environment, we see that it's a bit more of a discretionary spend. And so our categories and our businesses have had a tougher time this year.

Speaker Change: Salty snacks fit into that it didn't really get much mention I know, it's a smaller piece of the portfolio but.

Michael Lavery: Is that just more challenged because of a discretionary component or some reason that.

Michael Lavery: It isn't maybe getting some of the same investments or how does that just fit into your thinking and strategy for the year.

Speaker Change: Yes. Thanks for the question, what I would say for snack broadly overall in a tough economic environment, we see that as a bit more of a discretionary spend and so our categories and our businesses have had a tougher time this year.

Dana McNabb: And the onus is on us is really to do what Jeff talked about, which is to get our value proposition right across all our snacks portfolio, and then make sure that we have the best marketing new products and news to make sure that we're worth it for the consumers to buy. From a salty snack standpoint, it didn't have a great year this year, because we just had undersized participation in some of the largest growth trends. So what's working in salty snacks right now is really bold flavors, having the right value sizes, and then of course, making sure that you use that news to ground merchandising and display.

Speaker Change: On us is really to do what Jeff talked about which is to get our value proposition right across all our snacks portfolio and then make sure that we have the best marketing new products and new is to make sure that were worth it for the consumers to buy.

Speaker Change: From a salty snack standpoint, it didn't have a great year. This year, because we just had undersized participation in some of the largest growth trend. So what's working in salty snacks right now is really bold flavors, having the right value sizes, and then of course, making sure that you use that news to ground merchandising and display and I think we're all really excited.

Dana McNabb: And I think we're all really excited about the salty plans that are coming this year. We renovated three of our top flavors, significantly increasing flavor intensity. We have spicy innovation coming, like spicy dill, Chex Mix, and hot and spicy Chex Mix. And we've got a partnership with Tabasco and Bugles. We've got value coming in tubs for Chex. So we just got really good salty innovation. And I think you'll see our performance improve significantly in the upcoming fiscal year.

Michael Lavery: <unk> plans that are coming this year, we renovated three of our top flavors significantly increasing flavor intensity with spicy innovation coming thanks spicy.

Michael Lavery: <unk> Hot and spicy Chex snacks, and we've got a partnership with Tabasco on <unk>, we've got value coming in Tom for check. So we've just got really good <unk> innovation and I think you'll see our performance improved significantly in the upcoming fiscal year.

Dana McNabb: Okay, thanks so much.

Speaker Change: Okay. Thanks, so much.

Jeff Siemon: Okay, I think we're going to go ahead and wrap there. Appreciate the time and attention. And as always, we'll be available for follow up call today. Julianne, I'll pass it back to you.

Speaker Change: Okay. I think we're going to go ahead and wrap there I appreciate the time and attention and as always we'll be available for follow up calls today Julian I'll pass it back to you.

Michael Lavery: Yeah.

Operator: Thank you.

Operator: This concludes today's conference call. You may now disconnect.

Speaker Change: Thank you. This concludes today's conference call you may now disconnect.

Michael Lavery: Okay.

Michael Lavery: Yeah.

Michael Lavery: Yeah.