Campbell Soup Company
Q3 2013 Earnings Call Transcript

Published: 20 May 2013

[Operator:]

Good day, ladies and gentlemen, and welcome to the Campbell Soup Company Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Jennifer Driscoll, Vice President, Investor Relations. Please proceed.

[Jennifer K. Driscoll:]

Thanks, Sean. Good morning, everyone. Welcome to the Third Quarter Earnings Call and Webcast for Campbell Soup Company. With me here in New Jersey today are Denise Morrison, President and CEO; Craig Owens, Senior Vice President, CFO and Chief Administrative Officer; Anthony DiSilvestro, Senior Vice President of Finance; and Anna Choi, Senior Manager of Investor Relations. Denise will kick us off today with her perspective on the third quarter. Craig will then give you the financial and segment results for the quarter, our 9-month highlights and expectations for fiscal 2013. After that, we'll take your questions. As usual, we've created slides to accompany our earnings presentation. You'll find the slides posted on our website this morning at investor.campbellsoupcompany.com and on our IR app, which is available through Google or Apple. Please keep in mind that this call is open to members of the media who are participating in listen-only mode. As a reminder, our presentation today includes forward-looking statements, which reflect the company's current expectations about future plans and performance. These forward-looking statements rely on a number of assumptions and estimates which could be inaccurate and are subject to inherent risks. Please refer to Slide 2 in the presentation or to the company's most recent Form 10-K -- I'm sorry, Slide 3, and subsequent SEC filings for a list of the factors that could cause our actual results to vary materially from those anticipated in our forward-looking statements. Campbell completed the acquisition of Bolthouse Farms 1 week into this current fiscal year. The acquisition is now included in our results, and it drove most of the year-over-year changes in our first 5 -- 9 months. In September, we announced a restructuring program designed to improve our U.S. supply chain cost structure. Our third quarter reported results reflect $20 million pretax of costs associated with that program. Last, we signed commercial agreements with 2 companies in Mexico in February, and our third quarter reported results reflect $1 million of associated pretax costs related to those agreements. Our remarks today for the balance of our presentation will be on an adjusted basis, including Bolthouse Farms' operating results for 38 of the 39 weeks, but excluding its transaction costs and the restructuring charges. Since our presentation includes non-GAAP measures, as defined by SEC rules, we've provided a reconciliation of the measures to the most directly comparable GAAP measures as an appendix to the slides accompanying our presentation. These slides, along with our earnings release and selected quarterly financials, also can be found on our website accessible online or on your mobile device with the Campbell IR app. I've got one more thing to plug. We'd like to cordially invite our analysts to our annual Analyst Day at Campbell World Headquarters. This year's event will be held on the morning of Wednesday, July 24, and will feature presentations by Denise Morrison, Craig Owens and several other Campbell leaders. It will also be your opportunity to meet 2 of them who are new, including Luca Mignini, our new President of Campbell International; and Jeff Dunn, Head of Bolthouse Farms. After the formal remarks that day, we'll offer Q&A before concluding our Analyst Day with a very tasty luncheon, featuring Campbell and Bolthouse products. We hope you'll join us either via webcast, or better yet, live at World Headquarters here in Camden, New Jersey. Watch for more information later. And with that, let me turn it over to Denise.

[Denise M. Morrison:]

Thank you, Jennifer. Good morning, everyone, and welcome to our third quarter earnings call. As you've seen in our earnings release this morning, we are very pleased by our results for the third quarter. Our net sales were up 15% or 4% excluding the impact of Bolthouse Farms, which we acquired in the first quarter of the year. Our adjusted EBIT was up 9% or 3% excluding the acquisition. Our adjusted EPS was up 11%. These results were driven by outstanding sales and profit gains in U.S. Simple Meals, led by our U.S. Soup business whose sales were up 14%. There were also strong contributions from Bolthouse Farms and solid sales performance in Global Baking and Snacking, including both Pepperidge Farm and Arnott's. As you've also seen, we revised our previous guidance for the full year. We now expect to end the fiscal year with both net sales and adjusted EBIT at the high end of the growth ranges we previously forecasted for the year and adjusted EPS above our previous guidance. In my comments this morning, I'll offer my perspective on the performance of our Soup business in the quarter and comment on the progress of our innovation program in U.S. Simple Meals. I also want to talk about our plans for improving the performance of 2 businesses that did not do well in quarter 3

[B. Craig Owens:]

Thanks, Denise. Good morning. I'll spend a few minutes walking through our third quarter results and segment highlights, followed by a brief look at our year-to-date results. We'll wrap up with a full year sales and earnings guidance look. As Jennifer mentioned, my discussion of results will exclude the impact of all restructuring programs for the current and prior years, as well as acquisition transaction costs. For the quarter, we reported net sales of $2.1 billion, a 15% increase, reflecting the impact of the Bolthouse Farms acquisition, which added 11 points. Excluding the acquisition, organic net sales increased by 4%, our best quarterly growth rate since 2009. EBIT adjusted for restructuring costs, which impacted both the current and prior year quarters, increased by 9% to $293 million. Of the adjusted EBIT increase, 6 points came from adding Bolthouse and 3 points from growth in the base business, primarily driven by a strong performance in U.S. Simple Meals. Adjusted earnings per share were $0.62, an 11% increase from the third quarter of 2012. As you can see on Slide 22, 11 points of the 15% increase in net sales were attributable to Bolthouse. The growth in organic sales reflected 5 points of volume/mix growth, pricing contributions of 1 point and the negative impact of increased promotional spending of 2 points. The favorable volume/mix was from gains in our 3 largest segments

[Jennifer K. Driscoll:]

Thank you, Craig. At this time, we will conduct the Q&A session. [Operator Instructions] Sean?

[Operator:]

[Operator Instructions] Our first question comes from Jason English with Goldman Sachs.

[Jason English:]

I wanted to focus on the rest of your business, aside from Soup. I think you've addressed some of the weakness in Beverages and Foodservice. I want to focus on the Baking side of the business. Top lines look great, but year-to-date, there's been no bottom line growth. Can you help us understand some of the drivers of the margin weakness there?

[B. Craig Owens:]

Yes. In the Global Baking and Snacking segment, we have continued to cycle. If you'll recall, last year, we had a very difficult year in Australia. We essentially reset trade spending levels in that market. And through the first 3 quarters of this year, we have been cycling against that reduction and then against lower gross margins. The Pepperidge business has performed at a stronger rate than that through the first 3 quarters, and we are -- I guess we're probably about flat in gross margin at Pepperidge through the first 3 quarters of the year.

[Jason English:]

When are you done cycling that Australian trade spend adjustment? And also, if you could comment a little bit on sort of wheat cost here, where your inflation number sit and what the outlook is going forward?

[B. Craig Owens:]

Yes. So we should finish cycling the Australian trade adjustment in the fourth quarter. We should -- yes, in the fourth quarter. And if you look at the inflation forecast, this year, of course, has been a tough one on flours and grains, particularly in the early part of the year. I think as we look forward, we would expect, although it's a little early to tell in terms of timing of crops and whatnot, we would expect a more normal inflation rate in those businesses next year.

[Operator:]

Our next question comes from Andrew Lazar with Barclays.

[Andrew Lazar:]

I guess in Campbell's base business, excluding Bolthouse, perhaps if I'm doing my math right, maybe the gross margin was still down a bit in the quarter, despite a really strong, obviously, top line performance from the high margin Soup business. Final part of that is obviously trends in Beverages and Foodservice. But trying to get a bit of additional color maybe on the magnitude of gross margin and the change in the Soup and Simple Meals segment, just to give us some comfort that the operating leverage that one would expect from that type of sales growth in Soup was what we'd expect it to be or wasn't compromised in any way.

[B. Craig Owens:]

Yes. So gross margin on Soup and Simple Meals did show a positive impact of the leverage that you'd be looking for. We don't disclose precisely, but it was up over 150 basis points in the quarter. And you're right, the things that were depressing the gross margin x Bolthouse would've been NAFs and U.S. Beverage, both of which had pretty significant declines in both -- in gross margin, largely related to increased promotional spend.

[Operator:]

Our next question comes from Eric Katzman with Deutsche Bank.

[Eric R. Katzman:]

I guess my question goes -- I think, Denise, maybe it was your comment about -- or maybe it was Craig's, about consumption being less than shipments. Is it your sense that -- is this a timing issue year-over-year given the -- how warm it was a year ago? Or is this have to do with the retailers being a little bit more optimistic about the category? Obviously, with your share, you've got good visibility into what's going on in the shelf. So maybe you could talk a little bit about that excess inventory.

[B. Craig Owens:]

Yes. So measured consumption was about 10%, sales were about 14%. That implies -- and the tracking data that we have where we help manage inventory, would say that retailer inventories were up a bit. I think the good news is that most of that inventory was and is on the floor and we would expect to be moving. It's always a little difficult to forecast. You asked if it was a timing issue, difficult to forecast the fourth quarter. It's such a small quarter. And inventories are certainly going to drop in the fourth quarter, and the question is how much they drop relative to what they dropped last year. But you'd probably expect some of that to come back in the fourth quarter.

[Eric R. Katzman:]

And so you don't sense that it -- because I think we've gone through several years of inventory declines at retail as the category has shrunk. It isn't -- you don't think it's a -- well, I mean, granted you're going into the summer, but you don't think it's a function of the retailers becoming a little bit more optimistic about shelf space?

[B. Craig Owens:]

Well, I think the really strong sales in the quarter have sort of a natural inflationary impact on inventories. I mean, sales were terrific. They were beyond our own expectations. I think they were probably beyond the retailer expectations. And so as you went through the quarter, I think you saw higher order rates and maybe some of that will stick, Eric. But retailers have got -- I think the primary reason you've seen inventories drop is that retailers have gotten better and better at managing inventory, and we've gotten -- we continue to have really high service levels and are reliable and so they feel like they can operate on thinner inventories.

[Eric R. Katzman:]

And if I could just -- last follow-up. Denise, you sounded a bit more cautious about the new products versus the last couple of calls. Was there like any of the inventory build in the soup to-go line? Is it that material that it could have had an impact? Or maybe you can just address how much more spending do you think is necessary to get trial up on -- or sorry, repeat up on the products?

[Denise M. Morrison:]

Yes. If I came across as cautious, that's really not the right tone I was trying to set. I'm actually very optimistic about the platforms of the pouched Go soups and also the dinner sauce segment. What I was sharing with you were some of the lessons learned from this year's season. Because one of the things that we do in running an innovation agenda is we track what went right and what didn't and what can we learn from it and then how do we reapply so we get better in the next round. And so we've got very, very, very high hopes for these platforms, and we believe they'll continue to build over time. The thing that I really watch is the repeat rate because right now, the challenge we have is just to build trial because the repeat is really strong. So those that do try it buy it. And what we also are seeing is that it is attracting affluent consumers and more Millennials, which was what the objective was. And that's been highly incremental to the franchise.

[Operator:]

Our next question comes from David Driscoll with Citi Research.

[David Driscoll:]

Just one follow-up to Andrew's question on the Soup margins. Can you just say, again, was it volume leverage that predominantly drove the margin expansion or was it better balance on pricing inflation -- and inflation, Craig?

[B. Craig Owens:]

Largely volume, David.

[David Driscoll:]

Okay. Then my main question is just on advertising and consumer promotion. So it's somewhat odd, perhaps, to see just the incredible performance of Soup, and then in conjunction with that, the comments that A&C spending are down on Soup. So Denise, can you talk about the A&C spending on Soup? Can we -- can you reduce it further because some of it would apparently maybe be just ineffective? So is there just A&C that we can cut out that wasn't really doing anything, but yet this Soup business, with the new products and other activities, can continue to grow?

[Denise M. Morrison:]

I would largely agree with your assessment. I think that you can expect that advertising in fiscal '14 will not be higher as a percent of sales on the base business, but we will continue to be advertising at competitive levels, and I'm talking about the Soup and Simple Meals business here. And we will be funding and advertising our new product innovation. We have and continue to eliminate unproductive spending. And I also believe that we have made incredible strides in terms of the effectiveness of our advertising. And the example is Chunky soup where we did return to the NFL-themed advertising, and that resonated very well with consumers. But I think advertising has to be viewed as only a part of the marketing mix. I mean, we've made quality improvements. We've had new varieties that have added some news to the base and excitement, and we've also had much more effective promotion on the brands. So I think all in all, advertising is finding its way in the marketing mix.

[B. Craig Owens:]

But David, I wouldn't expect to see further significant cuts in advertising as we move forward. As Denise said, I don't think we'll restore the spending because it looks like what we're doing is working. And of course, we'll continue to look for where there's ineffective spending to cut that out. But I think if you think about it in terms of total level, probably not big reductions left.

[Operator:]

Our next question comes from Priya Ohri-Gupta with Barclays.

[Priya Ohri-Gupta:]

If I could just ask what your thoughts are right now on the international M&A environment, just given sort of your prior commentary on opportunities to grow into geographic adjacencies. And one housekeeping item, if you could provide your D&A number for the quarter?

[B. Craig Owens:]

So I think the question on the international environment for M&A is, as we've said a number of times before, we do believe that we can find opportunities internationally to get us into markets that, for the long term, sustainability of growth for the business would be good for us because they're faster-growing markets than our core markets. I think that we've also said, and it also continues to be true, there are not a huge number of targets out there, and the targets that are out there tend to be pretty hotly contested. We have a pipeline. We started working that pipeline as we -- as Denise came in to the CEO position and we sort of shifted our focus on M&A. We have -- you haven't seen us make an international acquisition yet, and that's largely a result of the fact that we're going to be pretty disciplined as we look at these things. Some of them take time because they're family-owned businesses, and it's a matter of building relationships and waiting for the moment when the family is ready to exit and sell. So we keep working at it, we continue to be disciplined. We think we'll eventually land some good opportunities, but obviously not going to comment on any specific situation.

[Denise M. Morrison:]

Right. To build on that, in addition to M&A, we are also pursuing partnerships where they make sense. So for example, our partnerships in Mexico with Jumex and La Costeña to do a distribution and manufacturing agreement for the Beverage business and the Soup and Simple Meal business is pretty exciting for us. So we'll continue to look for those opportunities as well.

[Anthony P. DiSilvestro:]

To address your last question, the depreciation and amortization for the 9 months is about $318 million, and that's up significantly versus the prior year because it includes accelerated depreciation on our restructuring programs and also includes Bolthouse Farms.

[Operator:]

Our next question comes from Thilo Wrede with Jefferies.

[Thilo Wrede:]

Denise, you basically announced the Soup business stabilized today. But where would you have to get the U.S. Beverage business to make that same kind of announcement? Is there any kind of top line growth rate or margin target that you have in mind? And if so, which one would be more important, top line or margin?

[Denise M. Morrison:]

I'm not really giving guidance on the Soup business going forward at this point in terms of a number. But suffice it to say that we believe that we've focused on fixing the fundamentals on better execution, on a better optimization of the drivers of demand and a better understanding of the portfolio rules for these brands. And we believe that -- we can say we've stabilized and now we're going to profitably grow as we go forward.

[B. Craig Owens:]

Yes. I think on the beverage business, Thilo, the -- clearly, we are -- as Denise said in her opening, we're not happy with the declines. Part of it is category. The category shelf-stable juice has been very weak. Clearly, we're doing better with portions of that category. Our premium -- super premium fresh juices out of Bolthouse are doing very, very well. Our Splash entry in less than 100% juice is doing well. But the core of our business and the core of our profitability, the red juice business and the V8 V-Fusion business, have not done well. I guess by definition, stability would be to arrest the decline. But we think that over time, the beverage business can grow.

[Operator:]

Our next question comes from Rob Moskow with Credit Suisse.

[Robert Moskow:]

I just did some quick weather math, trying to look at the number of heating days year-to-date 2013, and it looked like the number of heating days really weren't that different from 2011, '10 and '09. It really was 2012 was the anomaly. So I guess -- I know you said it's hard to predict or hard to estimate the impact of whether, but would you say that this was kind of a normal weather year or was it a colder-than-usual weather year 9 months year-to-date?

[B. Craig Owens:]

Yes. So it is both hard to predict and to quantify the impact of weather. And frankly, it's not something that we control, so we don't spend a lot of time focused on it. But if you just look at temperature swing, right, you're right, last year was the more unusual year. It was a very warm winter. This year has actually been slightly colder than normal. So the swing is about an 8-degree swing using the numbers that we have, and it has an impact. I mean, it's undeniable that it has a positive impact.

[Robert Moskow:]

Okay. And lastly, on the dividend, I haven't -- have you looked at raising the dividend? And if -- and normally, it happens in fourth quarter, I thought. What's your status there?

[B. Craig Owens:]

We have not announced any change to the dividend, don't intend to announce any change to the dividend in this call. It's an issue that the board continues to look at. If you think about over the last couple of years, Rob, we were down on earnings last year as we went through an intentional reset. We did not decrease the dividend. We held the dividend, and we've held it as we've sort of grown back to the prior level this year. I think I would look certainly to next year, we would expect to continue a positive trend and we would reconsider the dividend at that time.

[Operator:]

Our next question comes from Jonathan Feeney with Janney.

[Jonathan P. Feeney:]

I guess I just wanted to follow up on the line -- on Rob's line of questioning a little bit. I know, Craig, it's difficult to quantify and certainly not something you can control on the weather. But are there like -- how about an 8-degree swing, like you clearly have some methodology internally for thinking about benchmarking performance versus weather. If I were going to try to go back and look either within seasons and say adjust, I mean, can you think of a methodology, the best way to do that? Do you look at days below 50 degrees or days below 40 degrees? And how does that vary across markets?

[B. Craig Owens:]

Jonathan, I think the question itself sort of points to the difficulty, right? You have to get really granular. In other words, what parts of the country? What population centers? What was the weather change in specific geographies? And when did it occur? And honestly, that kind of dissection of weather is just -- I mean, frankly, we don't do it, right? And it's just not that useful because it's not something that we control. So again, at a high level, you can look at the numbers and you can say it had a positive impact, no question about it. We're going to keep our head down and keep working on the things that we do control. And we absolutely do not believe that weather was the primary driver of the improvement that we've seen. We think it's all the other things that we've been talking about, and you saw good share performance, for example, which is independent of weather and some other things that I think point to the fact that we're making some improvement. So we just -- I don't see the value of going as deeply as you'd have to go. And frankly, I think even once you got there, you wouldn't know much more than we know at the high level.

[Jonathan P. Feeney:]

Great. And just one quick follow-up, if you wouldn't mind, while we're on the topic of weather and seasonality. Is there seasonality to the margin of Bolthouse Farms? Or is this what appears to be 8% or so margin a good run rate going forward at the EBIT line?

[B. Craig Owens:]

Yes, there's not -- I mean, yes, there's not much seasonality in the Bolthouse business, I don't think. If you think about their product line, it's -- the impact of weather, I think, is pretty minimal.

[Operator:]

Our next question comes from Matthew Grainger of Morgan Stanley.

[Matthew C. Grainger:]

Denise, so can you talk a bit more to the learnings you've gained during the first few quarters of bringing Skillet Sauces to market, particularly around in-store positioning and merchandising? And you talked about having a clearer understanding, but can you give us a sense of what your target or objectives are going forward? And just quick follow-up on that, do you feel that you still have a good first mover advantage in that category, because it seems like a lot of competitors have moved very quickly? And in order to maintain any advantage, do you really need to keep the level of innovation coming very quickly?

[Denise M. Morrison:]

Yes. Well, first of all, we do know that it is more difficult to create new market segments. And what happened in the execution of Skillet Sauces is it was shelved in multiple store locations, and what that did was it impacted the reset timings to cut the product end. So as a result, we had a slower ACV build in some retailers than originally planned. The other thing is because it was shelved in multiple locations, it was more difficult for the consumer to find it and more difficult for us to say where it was in our marketing, couple that with the fact that marketing started in quarter 2. But since we started the marketing, we have seen a pickup in the sales, so that's encouraging. So we feel that we'll be working with retailers in 2014 on building out a dinner sauce segment in the store, and we'll talk more about how we're going to do this at Analyst Day. There have been some others that have come into the category. We believe that will add some scale to the segment, and we believe that our execution within that segment with Skillet Sauces and the new Slow Cooker will continue to give us the innovation to maintain the competitive advantage.

[Operator:]

Our next question comes from Alexia Howard with Sanford Bernstein.

[Alexia Howard:]

So this is a question on advertising spending on the new products. From memory, I seem to remember that the advertising budget overall was down a bit this year as you shifted the emphasis more into cheaper digital advertising on the new products, and I think that was to target younger consumers. I guess going forward, are you planning to step up to more traditional TV advertising on those products? And is it possible that by using the digital approach, you may not have reached maybe some older consumers who might not be exactly the target audience but could still be a meaningful part of the sales base? And as a real quick follow-up, if I can sneak it in, are you able to parse apart the U.S. Soup pricing and volume this quarter?

[Denise M. Morrison:]

Let me take the first part of your question first. Yes, we are planning on introducing TV advertising into the marketing mix on the new products. And we have seen that in addition to attracting Millennials and affluent consumers, the products are having broader appeal than what we expected, and that's a good thing. So the TV advertising does make sense. And then the -- I'm sorry, what was the acceptance about Soup pricing?

[B. Craig Owens:]

Yes. So the second one, on Soup pricing, as you remember, we had a list price increase on condensed soup coming into the year. The impact across the total Soup category for us was about 2% in the quarter, that would've been fully offset by increases in promotional spending. So net realized price was about flat.

[Operator:]

Our next question comes from David Palmer of UBS.

[David Palmer:]

Congrats on the core Soup sales strength this season. I was wondering if you could dig in to the reasons for this a little bit more. Obviously, we've talked about the percentage point lift to Simple Meals sales from innovation. Obviously, you also had the step-up in the frequency of promotions this year that was, I guess, partly funded by the advertising dollar spend. There was the weather, there was new Chunky advertising, reformulations I guess at the margin, which I guess are more of a focus going forward. Could you almost prioritize these things as you head -- not just look back on fiscal '13, but looking forward, how these proportions might shift in terms of the lift that you see to the Simple Meals segment?

[Denise M. Morrison:]

It was a combination of all of the above. I think that the sustaining innovation that we had on the Chunky soup was very impactful. It added new varieties and new news to the base, and these have been incredibly strong. And you couple that with the NFL-themed advertising. And like I said in my upfront, I believe that, that really resonated with consumers. And I don't think it's any one thing. When we talk about optimizing the drivers of demand, that can look a little bit different by brand, depending upon where that brand is. So we're going to continue on that program.

[Operator:]

Our next question comes from Akshay Jagdale with KeyBanc.

[Akshay S. Jagdale:]

Just wanted to follow up on the last question that was asked. Can you -- when you said 1 point was driven by innovation, I'm assuming that doesn't include innovation on other products and reformulations. Can you -- so first of all, am I right on that? And secondly, can you just talk more broadly about new products as a percentage of sales this quarter? That would be helpful.

[Denise M. Morrison:]

Yes. But we talk about innovation in 2 ways, we talk about sustaining innovation, which is news to the base. It's typically new varieties or line extensions. When we talk about breakthrough innovation, it's more disruptive, it's harder and it's designed to capture new consumer segments, new occasions or new usages. And so we do both and we talk about both. But in the innovation that I just talked about with -- it was really focused on Go soup and Skillet Sauces, which were more in the camp of breakthrough innovation.

[Akshay S. Jagdale:]

Any -- can you give us a sense of, of that 10% sort of takeaway growth this quarter, how much came from the other sort of sustainable innovation? I mean, are you seeing better repeat rates or are you doing more trial? I'm just trying to get a sense of what's driving the consumption growth just to get a sense of why it could be more sustainable.

[B. Craig Owens:]

I think one thing we can say on the Chunky business where we had the most significant number of new varieties, that that's a very impactful part of the growth of Chunky soup. It's harder for us to measure more broadly across the sort of Soup portfolio, but the incrementality of any specific item is on a quarterly basis. But the primary reason we don't break that out the way you're asking for it is because it's really difficult to quantify the cannibalization of a formula change or a new product. I think we'll come back probably at the analyst meeting and talk more broadly about the progress we're making and the contribution that, that is making to sales from our total innovation program.

[Denise M. Morrison:]

Yes. And in total, we're measuring innovation as a percent of sales on a rolling 3, so we'll be able to share some of that by category with you at Analyst Day.

[Operator:]

Our next question comes from John Baumgartner with Wells Fargo.

[John J. Baumgartner:]

Craig, in terms of Global Baking and Snacking, it sounds as though there's really not a lot out there in terms of acquisition targets right now. But how much more can you do in terms of maybe joint ventures or even leaning on your Indonesian business more to drive a larger footprint in Snacking over in China. Is that something that you're considering or is it less a priority right now for you?

[B. Craig Owens:]

No, it's absolutely something that we're considering. In fact, one of the things that we have done as we talked about broadening our footprint in emerging markets, we've been very active. Now realistically, they're pretty small, right? If you look at Indonesia, Malaysia, Mexico. But we've been very active. You saw us announce a deal for our Soup and Beverage business to really restructure the way we're coming at it in Mexico and broaden our distribution depth very significantly in that market on Beverages. Likewise, we have been investing pretty heavily in our Indonesian business and been seeing a really robust growth rate in that business because of that investment. We're also looking at export models and the possibility and ability to move some of that product. We already have some export out of the Indonesian business but looking at whether we can expand that in Southeast Asia. So all of those things are on the table. I don't want to overstate them in terms of their size because they're still pretty small. But we're looking at all of those avenues.

[Jennifer K. Driscoll:]

Thanks, everybody, for hanging on an extra couple of minutes. Sorry, we didn't get to absolutely everyone, but we appreciate you for joining us for our third quarter earnings call and webcast. If you missed any of our call, the replay will be available in about 2 hours by calling 1 [phone]. The replay passcode is 1614133. If you're a reporter and have questions, please call Carla Burigatto, Director of External Communications at [phone]. Investors and analysts should call me, Jennifer Driscoll, at [phone]. This concludes today's program. Have a great week. You may now disconnect.

[Operator:]

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.