Advantage Solutions Inc. (ADV) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Advantage Solutions Client Spotlight Call with Upfield. As a reminder, today's call is being recorded, and we have allocated 1 hour for prepared remarks and company-moderated Q&A. [Operator Instructions] At this time, I'd like to turn the conference over to Dan Riff, Chief Investor Relations and Strategy Officer for Advantage. Thank you. You may begin.

Thank you, operator. Good afternoon, everyone. I'm Dan Riff, the moderator for today's inaugural client spotlight call. Appreciate you joining us. Over the next hour, we plan to bring our essential sales and marketing solutions to life, dig into the biggest themes and debates in our sector and take your questions. With us are Tim Brown, the Regional CEO for the Americas at Upfield; and Tanya Domier, the CEO of Advantage Solutions. Tim has been leading Upfield's U.S., Canada and Latin America business for just over 2 years now, expanding their leadership in all-natural, plant-based nutrition products and coordinating production distribution and sales across these 3 regions. Prior to Upfield, Tim was President and Chief Operating Officer at Chobani and longtime CEO of North American Waters at Nestle, pioneering the bottled water business and creating a portfolio of market-leading brands in the space. We're excited to have Tim share his insights today. From the Advantage Solutions side, we couldn't ask for broader and deeper perspective than Tanya Domier's. Tanya has been with Advantage since 1990, leading in sales, marketing and operations roles, forming our award-winning marketing division in 2000, joining our Board in 2006, becoming President and COO in 2010 and assuming the CEO role in 2013. As CEO of Advantage, Tanya has reinforced a nimble, performance-driven culture and invested aggressively in digital solutions to help clients face challenges in an omnichannel world. With that, I'd love to dive in and hear some wisdom and insights from our 2 guests. I'll start with Tim.

Tim, great to have you today to help bring the Upfield-Advantage partnership to life. To start, can you share a bit about who Upfield is and how the business has evolved since it changed hands from Unilever just over 3 years ago?

Sure. Thank you, Dan. Yes, Upfield is a pretty young company, 3 years and a couple of months. As Dan said, it's a carve-out of Unilever, consummated and started as its own company in July of 2018. You would know the legacy brands like Country Crock or I Can't Believe it's not Butter as long-standing market share leaders in the spreads business. More recently, we acquired a nondairy cheese company, a vegan cheese company called BioLife, that has soon reached the #1 share position in nondairy cheese. We are, as we can calculate, the largest plant-based food company globally with operations in 60 countries, and we can find our brands in 100 countries. We aim to be one of the leaders in plant-based nutrition, heavily focused on dairy replacement at the moment, but growing our platform across geographies, channels and formats through innovation day by day. So hopefully, that sets it up pretty good.

Definitely. Thanks, Tim. We're obviously excited to have a partner focused on growth and in setting space like plant-based nutrition. Maybe I'll pivot over to Tanya. For those a bit newer to our space, can you explain who Advantage is and how we create value?

Absolutely. Well, first, we're the leading provider of outsourced sales and marketing solutions to consumer goods companies and retailers and really excited to just illuminate today, as Tim and I talk about, how those services come to life. We've got a really strong platform of competitively Advantaged services ranging from everything from headquarter sales and retail merchandising and in-store sampling, digital commerce and shopper marketing. And we do this for brands and for retailers of all sizes. And our mission is to help get the right product on the shelf, whether they're physical or digital and into the hands of consumers, however they shop. In fact, we talk about our mission being turning shoppers into buyers, and creating value on our platform is simple, but it's not necessarily easy at the most fundamental level. We sit at the nexus of consumer goods companies and retailers, and we're a trusted partner and problem solver for both. And I think you'll hear during this conversation, how we dig in brand by brand with partners like Tim and figure out, what's the landscape today? How do we evolve? We help our clients sell more while spending less. That's really important. And we also make them more effective and efficient. So it's that combination of effectiveness and efficiency that's really the most important thing, and we win with winners by providing them best-in-class services every single day and importantly, by really innovating on a nimble platform. We operate efficiently, and that has always provided fuel for reinvestment and growth, and we're able to redeploy capital at attractive returns through tuck-in M&A and organic reinvestment, both which you'll hear about as we talk about services that we use to help Upfield grow its business. And as such, we deliver value to clients by being better, by being cheaper, by being faster, and our platform compounds over time, growing profits at more than 2.5x the pace of the S&P historically.

Great. Thanks, Tanya. Great background on both sides here. Maybe I'll start off with a question for each of you. I'll go to Tim first. But maybe describe as you see it from Upfield's perspective, the partnership between Upfield and Advantage today and how it's evolved to be strong and deep over time?

Yes. Great. It's a fast-changing relationship, even in the 3 years we've been a company, and some of the brands relationship with Advantage predates the formation of Upfield. And as Tanya said, there's a certain amount of efficiency that's a high motivation to go outside and partner with a food broker. What's changing though is the landscape, both the consumer and retail landscape and how it all works together. And what we're focused on with Advantage now is taking advantage of their resources for speed, specifically an area that's developed for us is in e-commerce. And we certainly could have put together the depth of resources we needed in e-commerce to do it ourselves, but we couldn't have done it as fast as we were able to do partnering with Advantage. And that really came in handy over the last 2 years as we had this dramatic shift in shopper behavior due to COVID and people buying online and getting deliveries online. And we had to kick it into gear extremely fast and needed Advantage's help to be able to do that. And I'm happy to say, 1.5 years later, we've transformed our business online as a result, and we could take advantage of the changing way people shop and risk and reward, not miss out on would have been a significant moment in the history of our industry.

That's great. Tanya, similar views from your side?

Yes, absolutely. I mean the genesis of every great partnership is understanding where the CEO and the business team want to take the business. What their vision is, where their pain points are. And at the beginning of our relationship, I flew out and like that -- we probably spent 2 hours at lunch, just understanding what was the starting point? What were the goals of Upfield? What was Tim's vision and his team's for the business? And then we were able to evolve our partnership from when it was with Unilever to focus and align with Tim's priorities. And this meant a more holistic partnership with a heavy focus on sales and retail, and quickly expanding to add-in shopper marketing and analytics and insights. And today's partnership has just continued to deepen within those areas as well as expand to digital commerce work and back office support and natural channel representation for Upfield's BioLife acquisition, and more than 1,800 Advantage associates touch the outfield business. I looked that up in advance of this because I thought that would be something interesting to know. And these associates are an extension of Tim's team, and the best relationship you wouldn't know who's an Upfield employee and who is an Advantaged employee as we drive the business together. And the strength of our partnership comes not from just a point in time, but a continued dedication of strong and frequent leadership engagement, alignment to strategic priorities as they change. And as I mentioned, our team acting as an extension of Upfield's team.

Yes. If I might add to that, Tanya. This business and specifically food brokers had morphed to a point where it was highly transactional and focused on efficiency. An advantage over the last several years has really broken away and changed their business model to diversify the services really set themselves up very well to participate in the digital economy and bringing their partners along to the digital economy and take more of a holistic 360 view of how we engage both the consumer and the retailer in any environment. And again, for us, if we were to think about this 5, 10 years ago, it might have been all about efficiency, and it would have been narrowly focused on in-store activities. Now because Advantage is diversified, their capabilities, it's much more clear for us. Upfield, we have this ambition to have this deeper relationship with consumers and a more relevant relationship with retailers online and off-line, we couldn't do the central. It wouldn't be cost effective given our size and scale, and it would have been time effective to be able to do it at the speed the industry is changing. So it's really quite a match. And I think at best, we're kind of pushing each other. As Tanya said, we are strong strategic partners. The people on both sides have known each other a lot longer. And that very much helps because it really does feel like one team.

Really, Tim, when you say that about effectiveness, not just efficiency, you can't see me that I've got a big smile on my face because our thesis was in, let's say, 2013, that we were going to evolve before we needed to because we really believe if we look at ourselves and the landscape, it really was an efficiency play. And the only way that you can move from an efficiency play to an effectiveness play is to upgrade the 2 assets you have in a service business, which are talent and technology. And it really wasn't until about 3 years ago when I looked at our brand promise, about 4 to 5 years into the journey that I could truly say we were as effective as we were efficient. It really took time to get there, and we had to add that diversification of service, but not just that. We had to upgrade talent and technology to get there. And today, I believe any CPG company globally can outsource to us and I can look at a CEO and say, you will not trade off one bit of quality. In fact, we, in many places, are better than direct team, but it took a long time to get there. So thank you for knowing and seeing that, I guess.

So that's...

Sorry, Tim.

No. Ready for the next one.

Maybe one thing that might be helpful is if we dug a bit deeper on a few of the services. So you mentioned things like helping with e-commerce, collaborating on shopper marketing. As I interact with our investor base, they don't touch these services every day. So could we go a bit deeper with examples of what exactly the teams are collaborating on? What exactly is happening in the marketplace that is driving both efficiency and effectiveness? Maybe we'll start with Tim there.

Yes, again, maybe a little bit of a reference to the past where the these activities were extremely focused. Much of it had to do with keeping products in stock, resetting the stores, doing the administrative work that it took to do business with the retailer. And I think it was heavily weighted towards sales and merchandising rather than marketing. And the world is changing, and it's changing rather quickly. And as Advantage changes, so does our ambition to follow the consumer. So shopper marketing is a really great example where it is very much a situation where we lean on Advantage in marketing to do this in a highly effective way. There's a diverse suite of possible tools in shopper marketing. They have really different outcomes in ROIs. And again, for a company our size, which is like a mid-cap company, to be able to have the people with the depth of experience to be able to sort through the different programs and get to the to the ones that are going to deliver the best results, have better outcomes on volume, but in the long-term purchase behavior where you hold that consumer and to get a really good ROI. It's just something we couldn't do on our own. And so that's something, I would say, probably more than anything, it's fully outsourced. We have a hybrid way of working in chain retail. So some of the bigger customers who really demand direct contact with the brand, we may be the face and the name of record to work on the planning issues and the innovation issues. And sometimes, in some cases, we use Advantage to balance that up with all the work that's needed to stay current with the retailer. In some cases, we use Advantage to take the whole customer contact. And it's not just segmented by size. It really has to do with capabilities and who can do it better. And we look at every account and really make a decision, should we do that primarily ourselves? Should we do more of a split? Or should we lean on Advantage? Because, again, leveraging their scale, they can do it better than we could on our own. We're now venturing into some really interesting new areas. The most recent one is in the area of analytics and using predictive analytics and AI to model pricing. So one of the newest members, I think, of the Advantage family is this company called Eversight. They're on the leading edge of price modeling it's a competency that would be very difficult for us to replicate on our own. But it's extremely important, especially in this day and age as we're going into uncharted territory, managing through inflation. And we're going to -- we're already seeing quick insights and results using that service that's available. And as I mentioned, then we get into e-commerce. And e-commerce isn't one thing. It's certainly -- there's the straight e-commerce that more or less is winning in search engine optimization. And again, that's a heavy sweat activity, right, to understand the algorithms in any different retailer environment. And using Advantage's resources and experience, we've been able to make dramatic leaps forward in that. But e-business now goes into a different area where you start bridging your marketing activities that are heavily reliant on targeting. And that's the new frontier, where we're going to be bridging what people do online in researching a brand or integrating or engaging content to then what happens in the physical space and making sure that you get the best of both. So now with all these in-store resources, we can connect the online experience to the off-line experience or the in-store experience. And again, I think that would be really difficult to replicate on our own. And this array of services allows us to go forward at a pace that's needed for us. We have a high sense of urgency in transforming our brands, the category, really the way people eat, going more to plant-based. Nothing goes away when there's new ways of trying to reach the consumer or do business with retailers. So you almost have to have -- you can prioritize, for sure, but you almost need to have more arms and legs to capitalize on this. And it certainly helps then when you start integrating strategically all these activities. So it's not one-off, whether that -- whether we're looking at online, offline, whether we're looking at that by channel or by geography, or we're trying to target more in a more fragmented world against different consumer cohorts. So we're really grateful to have the diversity of services not just available independently, but what we're really working on together is to use them in a connected way to take, I would say, big leaps in how we approach this business.

I think one of the things that you said that really resonated with me is the connection. Because I remember when we had our first conversation, we were talking about all of the services are great to have, yet if they're not connected, you can't maximize the effectiveness and you definitely don't maximize the efficiency. So I think about just even progress in the last 2 years, if you think about the plans on the business and the ability to have connected plans that activate them along the entire path to purchase to make sure that we're driving results via digital and e-commerce and in-store touch points, our job is to turn shoppers into buyers wherever they shop. And I really love in some of the ways that you pushed us and in some of the ways that we did early testing and learning. And if you think about your mission for digital transformation and just Sage Tree, our business there, partnering to provide e-comm strategy, online grocery analytics and reporting, account management, ad hoc strategy and content creation, we did that for you in the physical stores forever. But it wasn't until we could seamlessly do that across both that I think it really unlocks the kind of value that we're so excited about together today.

That's powerful. Maybe a question, I guess, thinking about an opportunity where it was sort of all hands on deck, collaborate quickly, the emphasis that Tim has had on speed. Tim, you mentioned the BioLife acquisition, obviously, powerful acquisition, great opportunity to grow. Could we shed some light on how Advantage was sort of able to come to the table as a partner on something like that where you do a deal, it really needs to perform and grow and you have a partner that can help right away?

Yes, certainly, because the task is complex. As new food products come into the marketplace, there is a debate on where they should be merchandised in the store. We've seen this with not just plant-based food, but food like gluten-free, that at times, you will find these products first emerging in the natural set store within a store in a given retailer. As it relates to plant-based foods, many of them emerged first in the produce area of the store because that's where things like Tofu were sold for a long time. But realistically, as they grow, and we've seen this with plant-based milks and oat milk and almond milk, et cetera, they long term belong in the conventional area, so in that case dairy. In the case of gluten-free, you're starting to see gluten-free items, whether it's cookies or pasta or whatever -- where you'd normally find cookies or post, right? Well, as one company who generally -- we were in a single category, and that was spreads, we had relationships and connections and history with the dairy department in a given retailer. Launching this new plant-based cheese, we needed to be ready to do business in any part of the store. For us, those could be brand-new relationships. So the great thing about Advantage is they've got products all over the store. They've got relationships all over the store, and they've got relationships and interaction where different departments intersect. So it's, for us, again, leveraging the depth of their experience, allows us to have much more relevant conversations with the retailers. And whether that's where should it go today? Or where is it going to be tomorrow? Specifically then the other thing that's helped us with a fast start is these products emerge in a more impactful way in independent stores than they do chain stores. And again, it's another core strength of advantage to be able to reach the independent stores or the smaller chains where new products actually have a greater relevance. And if you're a mid-sized company like us and you're sort of following the 80-20 rule, it doesn't apply that well to this situation. So we really had a boost of energy and a joint plan with Advantage to broaden the distribution of this product and to be able to do it in a way that is going to evolve and connect, not just with consumers, but also retailers as they're seeing all this transformation happen in the way people eat, and it's happening quickly.

I think one of the things that brings to mind when you talk about that is you hear all of these things that we do and the component parts and they sound quite complicated, but the fact that we've got a very senior person on your business, that's the quarter back, their job is to make this very seamless for Tim and for Upfield. So the job of leveraging all of these assets and tools in the toolkit is part of the magic. So if you think about it, Tim, when we have that recent challenge for distribution to win for BioLife, if you just use 1 retailer, as an example, the quarter back made sure that Upfield and Advantage tapped into our smart team for shopper data and our integrated marketing shopper team to make sure that they had the best insight, then our headquarter customer team reports in for making sure that the retailer partnered Upfield's key account manager to get a seat at the table and have a voice in the negotiations to make sure that you could win. And...

Yes. And it really happened.

Yes. And by the way, -- it did, yes. I mean just with 1 retailer in this collaboration, 6 SKUs across all divisions, and again, it's this leveraging all of our assets. So what I really want everyone to know is creating rating fans are not just words. We work by account to leverage these assets for you and we celebrate the wins as if they were our own, another example of not knowing where your team ends and our team begins.

I have to say, it's also very good for the retailer. Because as food trends change and new food emerges, it's not always clear how to time it. And I think taking advantage of the range viewpoints and experience and insights that Advantage has allowed the retailer to look at the situation with a sense of urgency to make sure they were the leader in this new space of plant-based cheese rather than be a follower. And that's a win for all 3 of us.

Tim, a question actually from the investor audience that fits here. A lot of what you're describing access to scale, speed, et cetera, definitely, you're a nimble organization, your midsize organization. How much of that will still apply if you're 10x bigger someday? Like how essential will Advantage be if you're a larger mega cap as you hope to be?

I would have answered that differently a few years ago that it would have felt like -- and I've been part of scaling in a couple of businesses. And then with the attitude that you want to do things yourself. I don't feel that way anymore. I think it's going to be relevant and probably more relevant because of the changing landscape. So now when we talk in terms of omnichannel and the rapid change in the way we market, the way we engage consumers, in some ways, COVID accelerated e-commerce, but it also delayed a little bit real omnichannel because so much of the priority has been in the supply chain and keeping things in stock and the course serving the customer at the retailer. But we're going to get back on the trajectory where food fragmentation and changing landscape of consumer engagement was ongoing in. And that's going to mean you just have to do more things, and you have to do them well. And the ability to do many things well, self-contained in your organization is going to be a challenge. The younger workforce and their attitudes on continuity and staying with companies, and we're even seeing today on whether people really want to work in an office environment. I don't think we could approach it as a linear exercise or you get so much scale, then you bring things in-house. So I think the challenge of the diversity of activities to be successful in a range of environments from different channels to different departments in the store to changing the way people are going to buy, which we don't even know yet. There'll be more of a hybrid than this -- just the idea of well either I'm going to buy it physically or I'm going to get it delivered. Now the phone is this magic tool that's going to change how people research food, how they buy food and they will probably go towards a much more hybrid approach, where ordering things while they're in store and to either pick up at the end of the shopping experience or get it delivered to their home. And keeping up with all that and being confident at it, I think it's going to be extremely difficult, and I think we're going to need the partnership even more. And then there's also role clarity. So we want to be excellent craftsman in how we make our food, brand builders and how we bring the products to life. But we also want to be excellent in our relationship with consumers, the depth of that relationship. So that means great insights in content, and that means having real good role clarity that we do what we do well and then lean on our partner, Advantage, to do what they do well. So I really see the partnership being more important with scale, not less.

Got it. Very helpful there. Tanya, Tim earlier touched on a few areas that are focal points for Upfield moving forward and how Advantage may engage there. What are the biggest opportunities for us to collaborate with Upfield in your view?

I think -- well, first, we have to continue to execute with precision, and there's always an and. And at the same time, we need to innovate together and look at what are the pain points that we see today? And more importantly, how do we get ahead and determine together what the pain points are for the future? Our teams right now are building out a joint business manifesto that's going to be shared with all of our associates that are working on the Upfield business, and it's going to outline that future to growth. And it's focusing on a joint vision, a mission, and it's going to translate strategy into simple execution for the joint team and it's going to engage our associates as if they were Upfield direct employees. And I think another opportunity that I'm really excited about is our Eversight pilot, which is aimed at optimizing trade promotion. I can't think of a bigger issue to solve. It's an unsolved industry problem. And here, we're going to generate better winning offers and ensure that they're flawlessly implemented on shelves, and we're going to learn a lot. We're going to start with I Can't Believe it's not Butter at 3 U.S. retailers, and then we're going to quickly move from digital experiments to shelf deployment with our field teams in a matter of weeks. And this is one of the things that I think is a place that I'd really like to complement you, Tim, in being willing to do test and learn, and we win together in test and learn whether every idea works or not. It's getting in front of every single pain point that we see for the future and trying to decide very prescriptively how we craft solutions together that I think where the strength lies. And I believe trade promotion is one that we believe we can crack the code on. And I'm so excited to see how much value we can add for you to redeploy in your business if the test works as well as we think it will.

Yes. And we're equally excited. Again, a bit of a COVID thing, it really affected the marketing mix. Quite importantly, there was this surge in demand, but there also was, at moments, a difficulty to supply, which had a sort of resetting our historical approach to promotions. You couple that with inflation, and it's almost like we're starting over, right? And then to be able to do that with some business intelligence, with the power of the approach of Eversight and using machine learning and AI, we're going to be able to do that in a far more precise and effective way than we would on our own. So again, it's taking advantage what technology has to give. I think test and run is only the right way to do things because the channels and the geographies are so different, and you want to optimize, right? One type fits all is long gone by the wayside. And to really optimize and maximize your position on whether you're -- you want to get the best consumer engagement or the most volume or the repeat purchase and loyalty, you're really going to have to leverage these tools in order to be that precise. So we're super excited about the potential for what that's going to do for our business.

Got it. Tim, maybe one more on the relationship, and then we'll turn to both of you for kind of some of these headline issues that you touched on around inflation and things in the news like supply chain. It sounds like a strong partnership has definitely grown constructively over time. Are there any areas Upfield would highlight that Advantage can work on to further strengthen the relationship from here?

Well, Tanya and I have been talking about this and our teams have been working together on this, and it's something Tanya mentioned earlier, and it's the connectivity and the synergy of all these tools and services. So I think Advantage had great foresight to invest in this area and diversify what was a pretty well-defined business several years ago. And then build all these services and capabilities under one roof. But now what we're working on together is to integrate them. I'll give you a great example, we want to do geo targeting of consumers, but it affects in-store and online. So we have the data now to compare store A and store B in terms of how much product is sold. I used to always believe that I could go to the lower-performing store and see with my eyes, why that was, right? How the shelf is set? How many facings we might have, et cetera? But my eye is live. When I looked at the data and went to a store and saw that it looked just fine. I realized I had a consumer problem, and that I needed to do more targeted marketing by ZIP code in that geography. And that's a new capability that I have because of the robust targeted marketing tools. Now I can send messages to those consumers in that neighborhood, but I also need Advantage to make sure the product is there and in a visible way in the store. So now you start talking about bridging these online and offline together and taking advantage of the suite of services and capabilities, I believe will have a compounding effect. But we -- these are hypothesis almost to us as 2 sides of the partnership. And I think it takes a good relationship to imagine what's possible in this quick changing world and then challenge back and forth, okay, let's try that. Let's go someplace and do that. Let's do it together. And I know in some cases, we may be pushing advantage to cross leverage the different capabilities and tools. And it's an equal challenge back to us to adjust the way we market, not in a broad way, but in a very targeted way and make sure that we put the focus on those pilots to really see it through and prove whether it works or doesn't work. So I think that it's really pretty mutual in my assessment and a lot of it has to do with how quickly the world's is changing, and what's possible to do is changing right before our eyes. So to me, it's a very positive way of pushing each other.

Yes, sounds collaborative and constructive, which is ideal. All right. So 15 minutes or so left. I'm going to ask you guys to put your macro hats on for a second. I'll pivot over to Tanya to start. So top of investor minds in news headlines every day, topics like the need for record pricing, navigating record inflation, previously unseen supply chain challenges. What do we make of that at Advantage? And how are we helping clients navigate?

Yes, that's a great question. We have a pretty solid real-time take on these turbulent dynamics across all the consumer categories and sizes and retailers in every channel. And fortunately, you don't have to just care about what I think today because we've got a few highlights from our latest soon-to-be-released quarterly survey that I think really sheds some light on things that are most important to all of us and in determining how we pivot and where we need to guide and comes on act in consumer demand trends and pricing, e-commerce, supply chain and innovation. And what we found from our survey, and a lot of this won't be surprising, but some of it we'll reinforce, and a few things on the margin might be a little bit different than we thought, retailers and manufacturers now expect 2 more quarters of year-on-year growth in at-home demand. So that's up quite a bit from last quarter's survey. We see that price hikes are happening, and that was reinforced with multiple rounds of list pricing bumps and average price of between 6% and 10%. But we also heard through our survey that pricing alone is only offsetting commodities at half of our clients, and 75% of respondents also expect to change their approach to trade promotions post-COVID, something that Tim just alluded to earlier. Old ways of working aren't working. E-commerce gains from COVID are being sustained, which is something we predicted, but we weren't entirely sure and interestingly, not been as that cannibalistic to brick-and-mortar demand. This will not be surprising to anybody, but supply chain challenges continue in sourcing and in manufacturing and in transportation, and there'll be more catch-up investment to add flexibility from here, but right now, a definite pain point. And then I guess in the surprise category, there's little change expected in how innovation is tackled. I'm not sure that, that's the right answer, but newer, bigger innovation seems to be the best path from here. But it feels like right now, there's a lot of focus on blocking and blocking and tackling. And we've had almost 1.5 years with limited product, new innovation and sector M&A. So we're seeing signs of that returning, but it's a little slower than we thought and more selectively, basically rifle shot rather than shot gun blast. And if we drill down into the real-time state of play on pricing, we're seeing there's truly record high pricing intent out there and record high pricing need given the unprecedented commodity-driven inflation. I would say there's 1 yellow flag that we see, and that's relatively low pricing experience among revenue management teams out there. like investors that haven't seen a full market cycle, many of the pricing teams are navigating new territory as well. So people are building muscle, and it takes time to get that muscle to really have experience in that area. And in some of these cases, we're in unchartered waters. And I think in order to get to bright, we're going to need to see gray rounds of additional pricing informed by very strong analytics to support it. And I think we expect more surgical promotions as smarter-shopper promotions will align better with what is a still fragile supply chain and product availability and hopefully, create some funding fuel to support nascent retail media network.

Got it. Look forward to those survey results going public soon. Tim, maybe a view day-to-day from the grounded Upfields. Is what time it says resonate? Or is it different for you guys?

Oh, very much so. Look, I think there's, in parallel, different things happening. We clearly have a chain reaction of events directly related to business interruption as a result of COVID. I would say the clearest example of that is that you go try to buy a car right now. The lots are empty, right? Because there was no chips, right? Well, that said, there's scores of similar things that have started different chain reactions, and these gaps that developed and the reaction to those gaps have created quite a disruption of flow of goods globally and locally. And so one could think that dynamic is more temporary, that the supply chains will balance out over time as different elements return to normalcy of production supply business continuity service, et cetera. And then we have a different set of drivers related, but sometimes separated that's creating inflation. And it used to always be about monetary policy, et cetera. But now you have real changes in raw material supplies and how they're cross-use changing attitude of what people see are valid inputs versus things they want to change for sustainability reasons to adapt to new raw materials. I would just say this, the food system is really amazing. It gets a lot of criticism. But especially in a country like the U.S. where all these products find their way completely efficiently, either sourced domestically or globally, and we've had 30 years of deflation, measured by the cost per calorie, cost per gram and cost per pound, largely driven by automation and transparency. And you could say, a good help with the Walmart effect or the Amazon effect. Most of us, if you're under 70, haven't worked in a period of sustained inflation. And as Tanya said, it's all new in the entire food system. So it may be the retailer's vantage point or the food manufacturers vantage point or the suppliers that feed the food system, their vantage point, the change is happening for all of us at the same time, and it's affecting some things more critically than others at the moment, but that in itself causes its own chain reaction. And we're watching closely to how does the consumer adapt because inflation and income is not happening at the same rate as inflation and cost. So will people change their behaviors, their eating habits? We reached 2016, a point where our society in the U.S. consume more food out of home than in home. COVID had a shift dramatically the other way. But will it return to more of a 50-50? Or will some of this inflation effect change behaviors now that it has people eating more in home? And I think there's some carryover to that people have family dinners and liked it. They learnt to cook new things. 2 generations never baked, and they got to baking and they can like that. So there's all kinds of ramifications for this. I think the short-term view is you have to accept it and make plans to work with it. And if it's more of a universal outcome, then it's not a moment of thinking about gaming or taking advantage. It's really a moment where you have to sustain your business and do the right thing to sustain your business and your brand. I think it's going to be a challenge for brands to make sure they're worth it, right? So that's ensuring quality, ensuring innovation, ensuring relevance with the consumer and why your brands should be part of their life. So to me, this is just, we all have upped our game in the food system. And the food system ran rather predictably for the last 30 years. And now we're -- and it was fragmenting to an extent of how people were acquiring food and the type of food they were eating. What did you say, things are more natural or more organic, et cetera. Now this whole dynamic is really going to create disparity in terms of who's able to up their capabilities and lean into it and grow and who might not react fast enough and have worse outcomes. So to me, it's personally just fascinating, probably could use an extra couple of hours in the day. But we'll take it head on, and it's really good to have, again, a partner like Advantage that sees far more than we do to give us the business intelligence we need to make the best decisions.

Definitely. A radical shift from decades of slow and steady in CPG, to your point. Tanya, I'm curious, I do get this question every day, something Tim touched on. What consumer and potentially company behavior is likely to stick post-COVID versus revert? I know we don't have a crystal ball, but your take as well.

We don't have a crystal ball but I think it's becoming very clear that hybrid shopping is just the new normal. We don't see a return to pre-pandemic shopping behavior or consumption, but an evolution of the behaviors and brands and retailers who are winning now are those who are winning both in-store and online, and we believe that this will continue. We know from our survey in May and what we all see that a majority of vaccinated people plan to keep so many of their pandemic eating and shopping and self-care behaviors because they're more convenient, they save money or they're simply happier with their new routines. And yes, online grocery sales have increased $8.6 billion in August, which was up about 4.7%, I believe. But despite the increase, I think it's important, the in-store experience still matters. In fact, I can argue that it matters more than ever. People are returning the stores and increasingly, they're shopping across online and brick-and-mortar locations. So brands and retailers, I believe, need to continue to focus on the fundamentals of keeping products on shelves, providing engaging experiences. And I think the in-store experience is every bit as important because we need to retain the loyalty of the activities in store that are important to both brands and retailers as we make the omnichannel environment seem more. So the important thing is how do we turn a shopper into a buyer? But we have to know that it's going to be done differently for the long term, and it's going to continue to evolve. And the best retailers and the best brands and the best service providers will lean into that change, embrace the change and just start to work now on what are the pain points of the future.

Got it. Maybe just one last one for Tim for the time we have left. So you mentioned, Tim, family dinners and baking, and the research we've looked at definitely suggest that U.S. consumers, consumers generally kind of stick with new habits. So if you've taken the time to learn new cooking craft and bought spices and supplies, you're going to run that out a bit. What confirms like or what are firms like Upfield doing to help sustain that behavior? Does it change how you innovate in markets? Or do you just sort of hope to ride along with the tailwind as it comes?

Well, much more of the latter. So recipes are really one of the most important things that we think we need to do and can help us connect with consumers. For starters, plant-based recipes, healthier eating and providing solutions on that. And we've seen no hesitation in terms of people photographing their food it just shifted a little bit from photographing what came to you in a restaurant to photographing what you created at home. And these incredible platforms of Instagram and TikTok, Pinterest, et cetera. People want a direct relationship with their food. And it's getting more and more important. It's more -- it's dramatically more important, the younger you are, and they want to know the ethos of your food. That's why ESG is so important. So all of that, I think we were already on a path to pivot from sort of mass marketing to more of a one-to-one type of marketing. And the pandemic challenge just to move that faster and more relevant. And so it continues. Where it goes, we think it's definitely on us to remind people how much they enjoyed family dinner, how much they enjoy cooking, how much they enjoyed baking and not just keep it static, in the sense of 1 form or 1 type, but engage them in ways to experiment and try new things. So we just really see all of this as about relationships, all the relevant relationships with consumers. And if we provide value with great products but solutions and exciting possibilities, then we'll have more loyalty, more trial, more engagement. And so it's an exciting time in the food industry. We definitely like some of the tailwind of the behaviors, but I don't think there's any way you can just ride it. You have to actively participate.

Got it. Very helpful. As we are up against time. Tim, Tanya, really illuminating and candid exchange, hopefully, very valuable to the audience, to investors. Folks, if you -- your question wasn't asked or you have one you'd like to address offline, just reach out to me, [email protected] any time, and I can connect it to the team. But there will also be a replay if you want to dig in deeper, and I'll send that around in the morning. Thank you, everyone. Have a great night.

Thanks so much, Dan. And thanks, Tim. Take care.

All right. Great. Thanks to all of you.

Thanks. Yes. Bye-bye.