Haypp Group AB (publ) (HAYPP) Earnings Call Transcript & Summary

Hello to everyone watching, and thank you for joining us during the Lytham Partners Spring 2025 Investor Conference. My name is Roger Weiss, and I'm Vice President here at Lytham Partners. With us today are Gavin O'Dowd, CEO; and Peter Deli, CFO of the Haypp Group, who will be taking us through their slide presentation. Haypp Group AB trades under the symbol HAYPP on the NASDAQ First North Exchange. With that being said, let's get started. Gavin and Peter, welcome. We appreciate you joining us for the conference. And now I'm going to turn the floor over to you guys.

Perfect. Thank you very much, Roger. Greatly appreciate it. And thank you for taking the time, everybody, to understand our business a little bit better. Over the next 30 minutes, I'd like to walk through some of the more fundamental aspects of our business, and then I will pass over for Peter to follow through a little bit more on it, and then we will open up for Q&A after that. I'd like to start the discussion with the 4 most fundamental aspects of our business, which runs through. Firstly, we're sitting on 2 very powerful secular trends. The adoption of risk-reduced nicotine products relative to that of more harmful products such as cigarettes. And for us, it is specifically nicotine pouches and how rapidly that category is growing and also the shift for consumers to move from off-line purchases to online purchases and how successful we've seen that category in some of our earlier markets and the growth potential that, that brings for other markets as it goes through as well. We've also had a track record of internally funding this business in its entirety from the outset. And we've managed to continue with -- in recent years since we IPO-ed with 18% CAGR in sales, much more than that driven by nicotine pouches, which has become the strategically important part of our business and also even more robust growth in our underlying profitability. And we envisage that, that growth will sustain itself out into the future. We've always run with a philosophy of sharing the economies of scale with our customers and also with some of our business partners along the way. And that has further reinforced our operating model and differentiated us versus that of other retailers in this space. And we will continue to be able to do that as we get further competitive advantages as we go through. And lastly, we deal in the nicotine category. And nicotine is an extremely complex category when it comes to the regulatory complexities and the judicial complexities around it. We have developed the skill sets and the knowledge and the systems to be able to navigate this complexity because of our scale that no others have. And when I talk about our scale, just to contextualize this, we are around about 13 to 14x the size of the second largest online nicotine pouch retailer in the world. So we have significant benefits of that as it comes through. So moving along from here and starting with the most fundamental aspect in our category, which is what do we mean by risk-reduced products. Here is what's often referred to as the tobacco and nicotine risk continuum, where it looks at the harm to the user of a various level of nicotine products with cigarettes being at the extreme left and been marked out of 100% and then products coming over to the right, getting significantly lower in harm as you move away from products which are no longer being burned -- as it comes through here. The categories which we operate in are over to the extreme right on this. Our origins were originally in snus when we set up in Sweden. But when Peter and I took over this business back 8 years ago, we started to move much more towards nicotine pouches. And in recent years, we've been utilizing our infrastructure over the last 18 months to 2 years to also include only within Europe, vaping and heat-not-burn products where there's a different relationship with those products in Europe perhaps to what exists in the U.S. When it comes to our outlook for the category in general here, you can get a sense on the left across our existing geographies and our existing geographies are Sweden, Norway, the U.S. the U.K. and German-speaking Europe, how rapidly variations of risk-reduced products are growing within the markets. And you can see that, of course, the biggest driver of growth within these markets is nicotine pouches. And I think many of you sitting in the U.S. can probably see this with products such as ZYN going through as well and now more recently with other products coming through. We've also, for context sake as regards to why we're not in other European markets, this is what the selection of other European markets to the right looks like. And while we're not against expanding into those markets at the right time, there's not enough opportunity at this point in time to justify the priority relative to the markets we're currently in. Then if we take a look at online penetration, and we have to bear in mind that 100% of our sales are online. Here, you can see how online penetration rates are across each of the markets. If we take a look at Sweden, which was where this business originated, online now accounts for more than 1/3 of the market. And in Norway, which was the second market we expanded up to, it is now over 1/5. We see very good progress occurring across German-speaking Europe, albeit there are some material regulatory benefits for it there. But our biggest opportunity by far sits in seeing if we can take the largest nicotine market that we're present in by far, which is the U.S. and be part of rapidly growing the online penetration space there. It is worth contextualizing that for nicotine pouches in general across these markets, we operate between 75% and 85% share of the online market. So we are by far the largest player in any of these markets as it comes through. So we feel we can maintain that position within new markets as they come through or within the U.S. What's most critical is to see how rapidly that share grows over time. A quick look at our operating model. We are an online retailer of other people's products. Think of us almost like an Amazon for nicotine pouches because Amazon and other companies like that will never carry any nicotine products. We buy the products directly from the suppliers and we sell them directly to the consumers. I think that part of the operating model is relatively straightforward. However, there are 2 other aspects to our operating model that I would like to touch on as well. First, we capture a substantial amount of data from our consumers. We package it and we sell it back to the brand owners, most of which are the nicotine and tobacco majors. And we are the largest provider of consumer insights to the industry globally. And in addition, we provide and it's not unlike a lot of other e-commerce players as well. We provide a substantial amount of media outreach services, whereby people can buy various surfaces upon our sites in order to generate both awareness and trial for their products. And I will touch on that as we go through later on as well. Now if we stand back and before we start looking at the fundamentals of our operating model, I'd like to start with some of the core principles that we always keep close to our business here on where it gets to and that we were able to hold our decisions up against. And we look at this across 3 different stakeholder groups and one aspect as regards to how the external environment is moving around technology. If I start, first of all, with the consumers, irrespective of how time moves, we believe the consumer will always look for great value. They will always look for the broadest curated assortment for them. And particularly in this category, they will look for fast and accurate delivery. Nobody wants their products in this category turning up a day later or 2 days later. It tends to cause levels of anxiety potentially along the way. Also, when it comes to the suppliers, the brand owners in this space, they are always looking for an efficient, scalable access to the consumers, and we are not just the largest online retailer, we are the largest retailer of nicotine pouches globally. They're also looking for somebody who's trustworthy and credible and always complies with various regulations and particularly with ensuring that these products never end up in the hands of underage consumers. And then they're also looking for business partners that can capture that data from the consumers as regards to what's doing well and what's not and be able to package that and bring it back to them. We come to the third group in here, which is regulators, irrespective of the market which we operate in, the first thing at the top of everybody's agenda here from the regulatory perspective is to ensure that these products only get into the hands of people who are above the legal age to access this product. In Europe, that is predominantly 18. In the U.S., it is 21. And in addition, regulators want to make sure that there's appropriate limits and nicotine strengths and that the products which have been sold are being packaged and described properly. We test every product, and we reject a significant number of products every year. In fact, in 2024, we rejected over 90% of the products that came to us, whereby they did not meet our standards and where it was getting to. This not only supports our position with regulators, but also supports our position with consumers who like to know that there's such high standards and that if you get it from our side, it is a safe product. And then, of course, there is variations of local regulation, in many cases, at a national level, in some cases, even at the state and county level, and it is expected to comply with that as well. And lastly, technology. We believe that as technology continues to evolve, it will make it ever easier for people to be able to purchase products online, particularly products where there's a level of complexity with purchasing them, such as ensuring that the person is above the legal age. We also believe that as it progresses, the opportunity to utilize technology to personalize the experience becomes ever greater over time as well. And many of the benefits that come with the technology suites, and we can see this in how we have structured our own data and our AI in recent years are captured by the largest player if they are structured appropriately to benefit from that. Moving forward to the next slide and taking a look at the fundamentals of our strategy as it goes through. The consumer is at the heartland of our strategy, but we break our strategy down into 4 key pillars. We used to describe this as a SPAC, but then unfortunately, the concept of [ SPAC ] became a little bit decimated within the U.S. around about 4 or 5 years ago, so we had to change the letters around. So what we talk about here is very much around assortment -- sorry, Search, Assortment, Price and Convenience. So search, and I will touch on that in a moment, it's about how do we dominate the organic search positions within this and why that is important. Assortment, how do we have the broadest, widest assortment of new products, which are up to standard for our consumers. How do we always make sure on price that we have the most competitive price and how are we structured to be able to always have the best price within the market. And then for convenience, it's very much about making sure the product is fast and rapidly delivered to the consumer, but also that the consumer is kept up to speed on each step of the journey as it goes through. And behind those 4 pillars, we run a very clear principle here of underpinning it with technology and infrastructure to be able to make it scale and get ever better over time. If I start off on the first one of these, which is search and search dominance, I think it is worth bearing in mind that this is a nicotine product that we sell. And as such, you are very limited in your ability to be able to buy any advertising space for it. To be clear on this, Google, Facebook, Instagram, et cetera, they all have a very clear no nicotine policy. So you're not actually allowed by ad words for this. You will see ad words manifest within these spaces, but you will see them be very inefficient and be shut down again quite rapidly. In addition, we see many countries starting to introduce regulation that lead that makes it illegal to buy digital advertising for these products because you cannot guarantee that the person is above the legal age that you're advertising to. We've seen that already occur in Norway. It's already brought in for part of the product range and will be expanded across in the U.K. And in the U.S., the recent marketing granted orders from the Food and Drug Administration effectively locks that into the permit for the products to remain on the market that they will not be going through in that space. So what it creates is an environment whereby in order to get traffic to the consumers, you must be at the leading organic positions within the markets. This is why we run multiple stores in each market, and you can see variations of screen shots here as it goes through. For example, within the U.S., our lead brand is Nicokick, our secondary brand is Northerner. And you will see in Sweden, where we're carrying 4 brands in Norway, we're carrying a couple. And in the U.K., we're carrying a couple as well. The reason we do this is that if you're at the leading position within organic rankings, you take the vast majority of the traffic which comes through. If you're in the second position, you take the vast majority of the remaining traffic. And this creates a couple of dynamics within our business for us. First, if we look at the traffic that comes through to our sites in any given day, over 97%, almost 98% of that traffic comes to us organically, which means that our marketing spend is a fraction of what our revenue is. We're coming in at about 0.5% of our revenue that we spend on marketing. And that continues to reduce over time with regards to how much we're going to spend on marketing, not because we wouldn't like to be able to spend more, but because the opportunities to do so are simply nonexistent. But secondly, and perhaps more importantly, what we've seen over the years is this creates quite a robust moat around our business. Even if somebody can get their permits to operate and that they're prepared to invest very heavily and get the logistics and get the right products, et cetera, up and running, what they cannot get is traffic to their site because you cannot buy those leading positions because this category does not support the aspects such as Google AdWords, and that is shutting down more and more as time goes by. And if we take a look at what our positions are within this space, here on the right, you can see -- sorry, here on the left, you can see what our position is relative to the closest competitor across all of our markets. And we generally run between 4.5x and 7.5x the traffic of our nearest competitor in any market. And as I say, we generally run with between 75% and 85% share of the online channel across all of our markets. And that does lead to a situation whereby we continue to acquire an ever-increasing number of new customers onto our stores. The second piece I'd like to talk about is assortment and where assortment comes through here. The slide to the left here shows what share of our products that we're selling at this point in time that are products which were only launched less than 1 year ago. So you can see at the left is immediately when the product was launched. And then as it moves slightly over to the right on that chart, you can see the aggregate over the 12 months of where it is. Now what you can see is that we're generally on average dealing with 30% of our new products -- sorry, 30% of our sales in any given day are products that did not exist a year ago. There's a lot of new products coming to the market and the consumers are very keen to always try the latest and greatest, partly because those products are improving. This does tie in with some of our aspects and insights that I will touch on in a moment as regards to why we tend to have the products well in advance of what other retailers get. And as you move into the center, you can see that this is not just a Sweden-only aspect. And you can see here that the numbers reduced actually between 2023 and 2024 when it comes to the number of new SKUs we launched in Sweden. That is because, again, we rejected over 90% of what became available. But this has also been manifesting across other markets, and it is starting to grow quite rapidly within the U.S. as the consumer demand is driving it through. And then if we look at the individual consumers on this piece, we can see that it doesn't really matter across the markets. Each consumer tends to buy a significant number of different SKUs from us in any given year we're just going through, where we often run between 7 and 9 different SKUs per consumer, and that increases over time as consumers become more and more mature within the category, they wish to have a broader range of products. And that could either be flavors, formats as in mouth, feel formats, strengths, et cetera. And they can always feel very comfortable trialing a range of new products with us along the way because they know all of our products have been independently tested against our product standards by Eurofins, which is the leading laboratory for this same category globally. And what that creates is an environment where I'm going to sort of touch here on where the demand for our media is in huge demand here as it comes through. I actually worked in the industry for 8 years before I took this role for 9 years before I took this role 8 years ago. What you can see here is that anybody which is launching a new product, what they want is always the same. First, you want to generate awareness that your product exists. And then second, you want to generate trial for that product. And we have a broad range of solutions across our platforms from large banners, which you will see within each of our sites through to be able to do specific on-site communication, and there's often spaces here to create a lot of content, which is part of the reason why much of the content for -- why we dominate SEO is often generated exclusively for us because the brand owners wish to make sure their product is properly portrayed as it runs through. And even down to the checkout, whereby you've checked out with 20 cans, 10 cans of product A, 10 cans of product B, would you like for $0.99 to try a can of product C in your checkout and trial it. We think this will be the right product for you, test it in the comfort of your own home when you're at home. And what we find is that across each of our markets, our media tends to generate 2x to 4x the share of our market when it comes to the share of new trials that it runs through. So let me contextualize that. If you take Sweden, for example, we're about 31%, 32% share of the total Swedish market online and offline, we account for around about 65% share of new product trials in Sweden. If you look across at other markets where we have significantly lower share, such as the U.S., whereby we have about 2.5% share of the market, we believe we account for around about 4x that or 10% share of the new product trials within the U.S. So our media is quite a key component for us here. Now closely linked to our media is also our insights model. And we built this up in the beginning of 2020 regarding our overall insights. And firstly, on the left here, you can see how our insights tends to support on the consumer funnel as how it goes through. And we work with all of the nicotine majors utilize our insights globally at this point in time. And it can go from working on our data and working along with us here to understand what concepts would the consumer be open towards that they haven't yet got to understanding what is the right way to launch that product and what's the communication that should go with it and tracking down what is the levels of awareness, the levels of consideration and of course, be able to quantify the levels of trial either at a national level or within each consumer segment. We can often run this across either our segmentation keys or brand owners' own segmentation keys. And then recognizing the levels of repurchase rates and what levels of loyalty, both towards the product and towards the brand is existing. And we're now at a level whereby as we've developed this over the years, both from our quantitative and our qualitative research offerings, we have become the largest insights provider to the industry by far. But our data is also being utilized across a broader range of topics as well, such as M&A and regulatory research, which also supports those large industry players. And more recently, we also support heavily on aspects such as supporting with the data for regulatory affairs, such as within the U.S. to be able to help brand owners explain to the Food and Drug Administration, who it is that's actually utilizing their products and what share of them are ex-smokers, what share of them are ex-dippers, ex-papers, et cetera, as it comes through. And if we put this together, our media -- the revenue that we get from our media and insights accounts for a high single-digit share of our group revenue. Now as you can imagine, there is very variable cost embedded in this. So it is a significant value chain adder for us here as it comes through. And we will combine that with also the volume that we're buying from suppliers and because they don't have to manage multiple points of distribution, trade reps, et cetera, is generally accepted from the brand owners that if they sell products to us at the same terms as they do to the largest traditional retail stores, they make roughly 15% more gross margin on it if they sell it to us. That we were very happy to be the most profitable account for them, but that we always look to share to a level across the 2. And then lastly, within the pure e-com space, given the volume and scale that we have, we get a lot of benefits of scale, particularly within the distribution piece. So we group these 3 together, which is what enables us to be able to maintain a material sustainable price advantage to the consumer while still being able to maintain healthy margins as a retailer within the business. And if we go along to take a look at what material price advantages looks like, if we start off, first of all, in what we refer to as our core markets, which is Sweden and Norway, traditionally, there have been extremely low traditional retail margins within this space, but we can still operate with a 20% to 30% price discount within this market relative to what you can find offline. And if you look over at the growth markets, such as the U.S. or the U.K. or German-speaking Europe, there because of traditional retail margins for all nicotine products and because of the scale that we're getting towards within those markets, we can actually operate with a significantly higher discount of 40% to 50%. And this is a key component for encouraging consumers to migrate from offline to online. We recognize we don't need to maintain these price gaps to maintain the consumers. But bearing in mind that this category is still very much in its infancy, we believe maintaining these price gaps is critical for accelerating our share growth at this point in time. And the further we grow, the more that our media and our insights model tends to plug in on this and the more that it gives us oxygen to be able to reinvest back under that philosophy of sharing the economies of scale with our consumers. But scale advantages don't just stop there when it comes to the economics which we can provide. Scale advantages are also very useful to us when it comes to compliance and regulation. Because most of our compliance tends to be hinged via technology that we're running through, it is much easier given our scale to be able to continue to invest in aspects such as legal age access only or real-time reporting or managing complexity at a state or even a county level as it's coming through because of the scale of where we are. And in general, we generally like more and more regulation, which comes into the category because it makes it easier for us to be able to manage and create substantial competitive advantage relative to any smaller players, which should end up emerging. So with that, I will pass over to Peter to walk us through some of the numbers a little bit.

Thanks a lot, Gavin. So before we are looking forward to our outlook towards 2028, which we basically laid down in our Capital Markets Day in April 2025 and the material for that is available on our website, I would like to look back a little bit to the past. Our company is a bit more than 15 years old. However, 2021 was a very important milestone. This is where we had our IPO. Looking back the last 4 years, I would like to look at the 4 important performance measures, what really important for this business. First is the nicotine pouch volume growth. Nicotine pouch is the category most important strategically for our business. And you can see that throughout this period, we achieved roughly 40% CAGR. Also important to note that the share -- the volume share of the strategically important category grew from 34% up to 61%. In the middle, you can see the net sales. And the reason why we say the importance of nicotine pouch is that the underlying consumer demand dynamics are completely different in snus and in NP. Snus, particularly in Scandinavia is not growing any longer, the consumer relevance declining. And this is something you can see also on our sales performance. However, the nicotine pouch part of our sales is rapidly growing. This is helping us over the longer term also through a positive mix impact. The quality of our growth is measured by the profitability. And here, you can see our adjusted EBIT, which grew not only in absolute terms, driven by the volume, but also in percentage terms, thanks for the scale of economics running through on various lines of the P&L. With this backdrop to the past, looking at the future, First, in terms of net sales, we are looking for an 18% to 25% annual growth between now and 2028. There are 3 important underlying factors. First, we have a nicotine pouch dominated product mix and the nicotine pouch category expected to grow across all the markets we operate. Also within the country mix, we are expecting to see an increasing contribution from our growth markets, which is U.S., U.K. and Dutch, where the category growth is higher than the one in Sweden and Norway. You can see that for 2028, we foresee around 85% contribution from the nicotine pouch segment to our overall sales. What I would like to lay down here is a little bit what can drive the difference between 18% to 25%. And the biggest variable for us is the U.S. market. At the moment, and this is expected to remain for the future as well, U.S. is by far the biggest nicotine pouch market globally. It's a fast-growing market. For the last year, it grew more than 40% on a volume basis. As Gavin explained, there is relatively low online penetration at this point of time on the U.S. market. It's only around 3%. Depending on how fast the U.S. market grows and what is the share of market, what we can achieve, our growth rate can vary easily from 18% up to 25%. However, when we are looking at the 25% case, I would like also to remind you on the online penetration, what we see in our current core markets in Sweden and Norway, which is significantly above the 5% level. In terms of profitability, we will see a few different trends running through. Looking at the different market segments in our core markets, which are already operating around 10% adjusted EBITDA, we believe that we have further space to grow around 2 to 4 percentage points. In our growth markets, so U.S., U.K. and German-speaking Europe, the profitability at the moment is significantly lower. It's around 3% adjusted EBITDA. We will foresee here a fast sales growth and an improvement in the adjusted EBITDA. However, the different sales dynamics going to create a headwind on a total company level when it comes to the overall profitability. Emerging markets in our portfolio are defined as vape and heat-not-burn products. Here, we foresee relatively fast sales growth. However, same as the moment, we believe that we will be in an investment mode in 2028. So looking at our profit target, these different dynamics are embedded into it. For 2028, one of the measure of success will be sales. And as I mentioned to you here, we are targeting an 18% to 25% CAGR. Looking at profitability, we are aiming for a 5.5% adjusted EBIT, plus/minus 150 basis points, depending on how rapid growth we can achieve and what are the future growth opportunities we define our appetite to keep investing in 2028. And looking at the cash we are generating, we foresee that we will invest into growth as long as strong momentum exists and returns are expected. With this, I would like to put the focus a little bit on our short-term performance because we released our Q1 report just at the beginning of May. Instead of going through the entire report, I thought to pick up 2 important data and put it into a bit of a perspective and context over a longer term. On the left side, you can see our quarterly net sales growth year-over-year. Looking at the chart, you can see that in most of these quarters, we've been around the 20% mark. Looking at the adjusted EBIT margin, it's very stable and gradually growing period-over-period. Important to note that our media contracts are annual contracts, so we can achieve a step change always for the following calendar year. This is what you can see manifesting in the EBIT margin. With this, I hand back to Roger for questions.

Gavin and Peter, thank you so much. This has been a great presentation. I do have a quick question for you. You just spoke about the type of investment you were going to be making in the United States. Could you just talk in a little detail about for an online company, what U.S. investments would actually curtail?

Absolutely. Maybe just to contextualize this one a little bit, Roger. So the category itself originated within Scandinavia and the market is significantly more advanced within Scandinavia. Normally, what we see across most categories within the world is there's always no joke over here of the U.S. innovates and Europe regulates. On this category, we've actually found the opposite experience going through. Most of the innovation tends to come from Scandinavia, but the intense regulation from the FDA has meant that the new products coming into the U.S. market has been greatly slowed down. So just to contextualize this, for example, the largest SKU or the largest brand within the U.S. is ZYN. And it's the ZYN Mini or the dry format, which is effectively unused at this point in time in Scandinavia as second- and third-generation products have come through. So we've always taken a position within the U.S. of having a position -- a minimum position to be able to operate and keep going, but we were always waiting for what we refer to as day 0, which is when new products would start to come on to the market. Now a combination of both the first products been approved there in January. We've also seen a lot of new products coming in from global credible players throughout '24 means now is the time that the conditions are just ripe for us to take a run at the U.S. So we will be investing across 3 different fronts here as it comes in. First, we will be building up the local organization and running the U.S. more independently because it needs to be able to be agile to scale at the level of where we're going through. We've actually executed a fair few of those recruitments over the last quarter. So I think we're quite happy with how that's going along. Secondly, we will continue to invest within our logistics and convenience infrastructure. We have fully automated our primary warehouse in Houston in the latter part of 2024. We're now piloting some same-day deliveries and subject to how that works out as regards to how we scale that across some key urban areas within the U.S. because convenience is key, particularly for the first purchase under people recognize that maybe it would be good to order 2 or 3 days before you want the product with us for future purchases. And then lastly, we'd like to actually trial some concepts on how we could accelerate the customer awareness because the biggest challenge we see is that the vast majority of consumers, and we've seen this challenge in every one of our markets. The vast majority of consumers are not aware you can actually buy the products online. So we would like to do some spaces around that, such as, for example, referral programs, pieces like that in order to be able to encourage existing customers to tell their friends where it gets to. So I think that's the space where we will be investing quite heavily across those 3.

Got it. If I could just ask one more quick one. It sounds like the outlook that you've described in terms of the United States is relatively conservative in terms of your market share goals when you look out to 2028. What does the share look like in Sweden, which I call a mature market? And where does the U.S. sit in comparison?

Yes. So if I was to start that, first of all, our share of the U.S. -- of the Swedish market is 32%. Our current share of the U.S. market is 2.5%. Our targets coming out here for 2028 is to be somewhere in the 4% to 5% range. And I think it's also worth bearing in mind that for the products which are growing disproportionately fast than the U.S. at this point in time, we're already at the 4% to 5% range. So yes, we're not going to be particularly happy if we achieve these targets for 2028. But the best way we felt we could do this because I think if you start giving out 10%, 15% targets, it starts to become a little bit ridiculous as regards to where the numbers gets to very quickly here. So that was why we felt that the best thing to do was be quite clear with people of these are the targets that -- these are the guidance numbers we're giving and these are the underlying assumptions behind it. Be very clear that if we get to there, that's not success for us. It's simply something to base for people to be able to base their analysis on. But yes, we feel there is a lot more room to go on that.

Got it. Also, if I ask one more. When you talk about regulation, certainly here in the U.S., I think of the FDA, and there's been some, we'll call it, changes from the personnel standpoint. Are you seeing from your standpoint, any issues in terms of your dealings with the FDA? And how do you think about that?

No. Well, in general, what we see is that historically, over the last 3, 4 decades, Republican administrations tend to be a little bit more supportive towards nicotine products versus Democratic administrations. But it still has to be borne in mind that this category across 10 flavors got approved in the latter days of the previous administration as being for the benefit of public health because of how successful these products are at getting people off cigarettes. So I think we're not so much dealing with a situation whereby I think there's any political risk to the category, either from the current administration or even should there be a change in administration in '28 or in '32. I think what we potentially are dealing with at the moment is an environment whereby the FDA are perhaps struggling a little bit with approving more products because of that operational turbulence within the team, but that's the sort of space which will straighten itself out quite rapidly over time. Bearing in mind, once the first product gets approved, all of the products are very comparable when it comes to the impact that they have on public health. So once the first product has been approved, it creates a very strong precedent for the others to march through the pipeline much quicker. And I think that's what gives me confidence that the second-generation products will start coming through to the U.S. have already started coming through to the U.S. and third-generation products are already in the pipeline with the FDA, the sort of products which we're using here in Europe for the last couple of years.

I think given that we, I think, are out of time. So firstly, both Gavin and Peter, I want to thank you very much for joining us. And a big thank you to everybody who's watching this presentation. For the folks out there, if you have any questions or would like to schedule a meeting with the senior management from the Haypp Group, please feel free to send me an e-mail at [email protected]. Obviously, if you'd like to learn more about Lytham Partners, you can visit our website at lythampartners.com or follow us on LinkedIn to stay connected about future events that we're going to have. We hope that you all have enjoyed the conference and the rest of the presentations. And thank you again, and have a great day.

Thank you, Roger.

Thank you.