The Hain Celestial Group, Inc. (HAIN) Earnings Call Transcript & Summary

All right, everybody. Welcome back. Thanks so much, and welcome to our fireside chat with Hain Celestial. So with us today, we've got President and CEO, Wendy Davidson; and CFO, Lee Boyce. Thank you both for being here in Boston. We appreciate it.

Pleasure.

Yes. Maybe a good place to start Wendy, it would be -- you just reported your fiscal fourth quarter earnings last week. Our results were in line with your updated guidance. You provided your preliminary outlook for fiscal '25. What are the key takeaways that you want to make sure investors sort of understand about how fourth quarter came through and then more importantly, the guidance that you laid out for '25.

Yes. I think the most important thing, and you've heard me say this before, is we want to be a promises made, promises kept business. And so we guided appropriately for quarter 4. We feel good that we came in on our guidance for top line and a little bit on the high end of our bottom line, but probably most importantly, was the delivery of our fuel and the pay down of debt. And that puts us in combination into a better position as we start fiscal '25. I think we also gave with some help from and guidance from you as well on appropriate conservative guidance for fiscal '25, and we're very intentional in providing an outlook for the shape of the year, so that we manage expectations. We are in the middle of a transformation, and we were very clear a year ago on Investor Day that we had work ahead of us and that we were -- didn't have the luxury of a robust balance sheet, so we were going to need to pay as we go that we would throttle forward and back things based on how the year would shape out. And fortunately, our focused pillar around simplification and our fuel pillar, both set us up to be able to make some investments and continue to pay down debt to put us in a better position. So I think that's the combination of what you saw last week.

Good. So it's been about a year since you unveiled the Hain Reimagine strategy. Are you where you expected to be? Why did you rebase the net sales CAGR to fiscal '24? And are you confident in your ability to hit the Hain Reimagine targets.

Yes. So I'll start, and I'll give Lee the chance to fill in some color. We are, in some ways, better than where we thought we would be at this point a year ago and in some places, a little bit further behind. So in terms of the simplification of our portfolio, the businesses that we've divested, the geographic markets that we have exited a physical footprint, the simplification of our portfolio and the focus of the organization, I think we are exactly where we expect it to be. I think in the fuel pillar, we are ahead of where we expected to be. We have unlocked our working capital really strong progress in our payables work, really strong progress in our inventory management. What you don't want to happen is that you drive inventories down, but your service levels suffer as a result. So we've been able to appropriately balance those 2 things. I feel very good about that. So those 2 pillars are good. I think it's allowed us to invest in capabilities that we knew we needed to have, so that we could do the out big the small, small to big. We need to have scale capabilities in places that the customers expect us to have, category management, consumer insights, strong innovation pipeline, but we need to be able to be nimble and agile and consumer obsessed in the way a start-up would be. So we had capabilities we needed to invest as a company. And I think we've made really good progress there. And in adding our capabilities in away from home, especially, which you know is a big pillar for us for growth. Where I think we are farther behind than I expected to be in the grow pillar. While our grow and maintain brands did grow at 3-plus percent, so 85% of our business is growing at 3 plus, which was our algorithm. The 15% that we earmarked for stabilization declined double digits, and that was a much more material decline than we had hoped for and required much more aggressive actions to stabilize. So I would say that, that's probably the place that we are a bit behind. You probably want to speak, Lee to maybe a little bit around our margin expansion progress.

Yes. So just I guess building on a couple of things you said. Just as a reminder, I mean, we said, as part of Hain Reimagine, we were going to deliver $165 million of net working capital release. We delivered over 1/3 of that in the first year. So we do feel really good about that. The second thing, and it ties a bit into the margin is on productivity. We had an estimate of $61 million, we delivered $65 million. As we go into 2025, we see upside even to that number. So you did see the margin come through. We saw it in Q4. We saw 70 basis points, we saw it on the year. We feel really good. So we have 125 bps of margin improvement in 2025. So as I think about it, the fuel piece is the real foundational element, we feel really good that, that is kind of humming. In terms of the unlock on the cash conversion cycle, I mean, we unlocked 15 days in payables, 3 days in inventory. We see lots of upside there as we did peer benchmarking, we're still gap versus peers. So as we go into 2025, probably a broader answer than you want, but as you go into 2025, we see sequential margin improvement continuing.

And the rebase to fiscal '24 in terms of the sales CAGR as part of Hain Reimagine. Maybe just level setting everybody here in terms of the rationale around that.

Yes. We backed out any of the business exits and divestitures, which was actually something that we heard from the investment community was to get to a more common like-for-like organic metrics, so that you weren't having to do the math to figure out what was coming in and going out and especially knowing that our focus pillar would include divestitures of brands, shutdowns of brands, exits of subcategories, there was just going to be a lot of noise. So we wanted to make sure that we provided as much visibility and transparency to what was exited, but there's some material exits. And so we felt like to reset the expectations at a new baseline. We actually gave quarter-on-quarter view of baseline to investors last week. So the starting point for each quarter, but I think it's important to also point out our view of Hain Reimagine was that by the time we get to fiscal '25 or '27, we have a consistent shape of our P&L. And that, that shape of the P&L, you should expect Hain to deliver 3 plus on the top. You should expect us to add minimum have 12 plus in our EBITDA margin. You should expect us to be SG&A at industry benchmark and then we're unlocking the fuel in the business and that we've gotten our leverage down to 2 to 3x. Those for us internally are the core metrics that we're driving towards. And I feel good when I look at our starting point this year, that exit those business divestitures, we're actually in pretty good shape to our algo.

And the other thing, I guess, just building on that. And we kind of emphasized, we talked a couple of quarters ago, that grow and maintain that 85% of our portfolio is growing at 3% plus. Where we had a drag was really in stabilize. So that's one of the big things is -- our focusing on personal care on shrink to grow. So really cutting the SKUs down all of those tail SKUs, it's about 60% of the SKUs and then focusing on the profitability of that business.

Many of us have followed Hain for a long time. You said you're a very different company from even just a year ago. It's harder to see that from the outside sometimes, could you provide some examples to help us understand what that means for Hain?

Absolutely. So those who would have followed Hain, you would have seen a company that was in a great space. Health and wellness is a great space to be in. But the company grew through acquisitions, very little integration, but also went into lots of categories that had a lot of complexity to the portfolio. And over the last 4 or 5 years, my predecessor actually did a lot of portfolio cleanup and divestiture to get the business down to sort of a fighting core. But what still didn't take place was a lot of that end-to-end integration. And so what you end up with is you are big in ways that don't add value, and you're small in ways that don't add value. So we needed to actually rebuild essentially the company end-to-end that would unlock resource spend, so that we could invest in capabilities that we needed. So what this looks like is we have actually sort of reshaped the company, vision, mission and values, clarity on who we are. We're in 5 categories, and we're in 5 geographies. Anything outside of those 5 categories in those 5 geographies are the things you've seen us divest or to rationalize. That's tightening up our geographic footprint, where we might still distribute into a market, but we don't need physical assets on the ground. You would see us driving better capacity utilization of our plants. So consolidating our meat-free operations in Canada, consolidating our personal care manufacturing operations. You would see us driving a distribution footprint to be closer to our customers, so that we can get products reshaped into the marketplace faster and a restock into the marketplace. So those changes in our geographic footprint, you would see us driving synergies at the center. So we now have global functions that have centers of excellence. That means we have one consistent way of measuring our end-to-end supply chain, one consistent way of managing our people practices, one consistent metrics or systems around financial management of the company. This has allowed us to actually consistently approach the marketplace, but to drive out excess costs. What you might not realize for Hain is 50% of our spend is actually global. And in some cases, we have the same suppliers that we were buying the same ingredient, but we were paying 3 or 4 different prices with multiple pricing terms. We've consolidated that procurement, both indirect and direct procurement centrally that allows us to be a better partner to our vendors. It allows us to actually leverage our scale in back office. We've done a lot around co-manufacturing. And I know in the past, this was viewed as a may be a disadvantage for Hain. I've been at companies that actually had a substantial portion of the supply chain was co-manufactured, but it's how you manage it that matters. We have a global head of co-manufacturing. We now have maybe a dozen less co-manufacturers, but they are more important to us. So we have fewer, more strategic. We manage them as an extension of our supply chain. We look at their plant attainment, their cost, their quality, their consistency. So we are more scale with them. They are more scale with us, but those are areas where we're driving back-office synergies. And then there's honestly some basics, we didn't even have a way for the company to talk to each other across the region. So we're on one Microsoft platform now. We're on one e-mail system. We actually have teams that can talk on video with one another. It sounds super basic. But the company now feels smaller, and we're leveraging insights, consumer research, innovation and processes across geographies that's helping us in categories like Baby. We launched this year the same innovation in our Ella's Kitchen brand in the U.K. that we launched in Earth's Best in the U.S. That kind of share and reapply of innovation didn't happen before. We're doing the same thing in meat-free. What we launch in Yves, we can launch in Linda McCartney in the U.K. So allowing Hain to be scale where it matters and move with the agility of a local startup in the markets where we take place.

Thank you for that. Fuel delivery has been a top priority, certainly in the first year of Hain Reimagine. Where did you over-deliver your target for the year? And where do you see the biggest opportunities left in the coming years?

So I'll start and I'll flip it over to Lee or you could just keep me honest. So, take up the numbers as I go.

I will, [ keep you honest ]. I will.

So when we looked at fuel, it was everything end to end. So there were elements that were just plant efficiency. So it's the OEE in our individual manufacturing operations. So think end-to-end in your operation, what's your equipment rated to? Are we running at full capacity in our line. So there's just manufacturing efficiency there was also procurement, both direct and indirect, where we knew that there was fuel that we could pull out of that. there's our conversion cycle, our cash conversion cycle, how are we best managing it. So with payment terms to our vendors, it was our days of inventory that sits on hand, so we're just sort of locking up money. And then it was revenue growth management. net price realization, trade efficiency, mix management, price pack architecture. Essentially, at the end of the day, are we sweating the assets we have and getting the most cash unlock in the business that either allows us to invest behind the business or put it to the bottom line. So where we were ahead, I'd say our plant efficiency. The team has done a lot of really good work. And actually, in our own manufacturing, our safety levels are world-class, in safety levels. Our quality has continued to improve, and our efficiency of our operations has improved. We've made investments in capital to add capacity. So I feel really good about that. We reduced our inventory days by about 15 days.

So 3 days of inventory.

This is where I'm making up numbers.

3 days of inventory, 15 days of payables. So that was the huge unlock. We see continuing momentum there. And then in terms of the productivity, I mean, is things that Wendy mentioned. This is direct materials. We didn't go to [ L ] vendors is one company. Now we are doing that. So we see that as a big unlock indirect materials. The other thing is looking at our distribution network. And then fast adapting, I mean we've put in a kind of best-in-class supply chain team, really kind of then leveraging that around the world. So there are points when we are able to consolidate some of our manufacturing and drive margin expansion, which we've seen. We've seen that in a couple of areas.

Got it. Great. Under the build pillar, you've talked about investing in critical capabilities to drive growth. Maybe you can provide some examples of some of the changes you and your team have made and the impact thus far and maybe where you see the biggest opportunities going forward.

I'd say the biggest improvements that we made in building capabilities, we knew in our commercial go-to-market, we needed to unlock some untapped channels away from home was an untapped channel, convenience stores and food service in both of our regions. We also knew that our brand-building capability needed to be enhanced, and it's things like our brand health metrics, making sure that we're consistently measuring brand awareness, household penetration, market share, the things you'd expect to see from traditional CPG companies. And we knew revenue growth management was the capability that we needed to have that would allow us to have our trade dollars work harder. I wasn't necessarily looking for us to have trade savings or marketing expenditure savings, but we wanted to make sure that the working trade to nonworking trade needed to be improved and the working marketing to nonworking marketing improved, so those were capabilities that we added. And where we sit today, so our working to nonworking shape in both trade and marketing has improved. Our trade effectiveness generated about 50 basis points of trade improvement this year. We see greater potential as we go forward, especially as we unlock not necessarily trade effectiveness as much as price pack architecture and getting a real trade or real price -- net price realization in the marketplace. How it has shown up or -- is data that we see where, in particular, in the U.K., we are the #1, #2 and #3 soup brands. But they play at 3 different quality tiers or 3 different premium tiers, but they were priced the same. So we actually partnered with our retail partners to make sure that they were priced at the appropriate tiers to ensure that the consumer was getting the value expected for each one of those 3 brands. We've done a lot to unlock distribution in C-store. We picked up 13,000 C-stores in the latest quarter. We're now at a store count of about 48,000. That's new for Hain because we hadn't really had especially our snack portfolio available in on-the-go in convenience stores. That is a result of us adding away from home capability in both of the markets. And our brand building capability, we're seeing a return on investment in our master brand campaigns this past year in Earth's Best, Good Food Made Fun and in the Celestial Seasonings, magic in your mug, campaigns both contributed at a higher level than we expected. You'll see in the latest 30 days, we launched our first ever master brand campaign on Garden Veggie and so we'll be leaning into that. We have a new master brand campaign on Celestial that we'll launch in October. I think our brand building muscle is better than it's been. Our brand health metrics allow us to be able to see the effectiveness of that and to move with agility to turn the crank when we need to as we go -- and then our innovation muscle was an area that we invested. You see that play out this year in Celestial Seasonings, we launched 2 innovations, Sleepytime with Melatonin. We would have had samples here, but we didn't want anybody to sleep through the meeting. But Sleepytime with Melatonin and throat cooler, both had wellness claims. And Sleepytime with Melatonin is in the top 100 SKUs in the herbal [ tea ] set in its first year, which is very unusual to see. In our Garden Veggie line, we launched Flavor Burst, which is the first Better-For-You, tortilla, really seasoned tortilla and over 80% of the sales of Flavor Burst are incremental to the Garden Veggie brand, which is really unheard of in the first for any kind of innovation to not have cannibalized the core more than that. So I think we're building the muscle to build brands, building a muscle to drive commercial execution and building the muscle to ensure that our products are productive on shelf.

We get a lot of questions around the complexity of the business for a company of Hain size, the number of brands, the number of geographies. Can you talk more about why your portfolio as it stands today, make sense together and how you can compete effectively against larger CPGs?

So the 3 areas that you look for and any reason why a company is together, at least in my opinion, is you're looking for diversification that helps offset you're looking for synergies where you can drive those in areas and you're looking for scale. When I look at the Hain portfolio, we've clarified who we are. We're in 5 categories that are consumer repertoire categories that they buy on a regular basis. We're in 5 geographies that actually are high-growth markets, especially in Better-For-You, and we are under-indexed in our market share, especially in distribution in those markets. So we have more distribution to gain, we have more upside in those core markets. So we don't have to spread outside the 5 to be able to drive that growth. But then when I look at synergies, we have synergies at a category level. We have synergies across our Baby portfolio. We have synergies across our meat-free portfolio. We have synergies across our nut butter portfolio. We have synergies across snacking in both geographies. And then that's the most important element is scale. Where we drive scale is in the back office. Most companies that are in better for you would be a single brand, a start-up that's driving sort of consumer obsession for their branding category or your big CPG that happens to have some better-for-you offerings. We play in the middle. And in order to play in the middle, we need to be big in ways that add value, and we need to move with agility in ways that matter. And that's where we look at each one of our brands needs to be a brand that can scale. It needs to be a brand that has a unique value proposition. We want to be in high-growth categories that the consumer regularly needs, and we want to be a pure-play Better-For-You company. that understands the consumer and what they're looking for when they're looking for health and wellness, we think we're uniquely positioned to be able to do that. What we haven't done well in the past is ensure that the right assortment is available in all the points of distribution it needs to be that's where we're focused. And if we do that and then we leverage our trade dollars in a way that drives feature and display, then I think it's a win for our retail partners, and it's a win for our business.

Got it. For the businesses you've classified as stabilized. Maybe you can provide an update on the strategy and how far along you are? Do these businesses make sense as part of your portfolio longer term? And does the uptick in M&A activity, we've seen impact your thinking at all?

So there were 4 businesses that we hadn't stabilized this year. One was ParmCrisps, which you saw us announce yesterday, the divestiture of ParmCrisps, which was not necessarily a business that we could scale in snacking. This year, we had infant formula set in stabilized. We're actually in a much better position in infant formula. We have been in full production since June in all of our formulations now. Not in all sizes, we will be back into all sizes as we go into quarter 2. And I think we've taken a fairly prudent approach to how we would drive our regain of our distribution and I feel really good about it because where we have gained our distribution back or where we've gained new distribution, our velocities are where they were 2 years ago before the supply disruption. So it tells us the brand is strong, and I would anticipate that infant formula will be moved out of stabilized as we go forward, which leads us to 2 businesses that sit there. Our meat-free business, which is both the Yves brand in Canada and the Linda McCartney brand in the U.K. and the personal care portfolio. So I'll start with meat-free. It's a category that we feel has good long-term tailwinds. I think there were a lot of bright shiny objects that created a lot of higher expectations over the last few years. We also had a consumer that was financially pinched. And so making trade-offs, it really affected the meat-free category. But the long-term tailwinds still exist there. We have the #1 brand in Canada and continue to gain share, albeit in a decline area in a shrinking category. And in the U.K., we have the #2 brand in the U.K. Our focus in both of those businesses is manage them to ensure that they are profitable, get to the fighting core of assortment and ensure that we're delivering on the things that are most important to the consumer, which is taste, convenience and affordability. And so we're focused on those things. But I feel good about the long-term trajectory there, but we will continue to keep them and stabilize while we really rightsize our operations footprint. Personal care, we made some pretty significant changes in the last 6 months. We divested the Queen Helene brand, which actually didn't meet the Better-For-You criteria. We have eliminated 60-plus percent of the SKUs across the personal care portfolio, which included some subcategory exits, but to be quite honest, we shouldn't have been in. We had taken some of our brands into every possible subcategory of personal care, where we couldn't be a scale player like deodorant or toothpaste. So we exited significant subcategories, and it resulted in about 30% of the revenues and the personal care portfolio came out. I think we've gotten it to a fighting core, you'll see some headwinds in the front half of this year as those begin to play out when this business gets to a good run rate around profitability, it gives us optionality to then decide where is the best place for those businesses, either in the Hain portfolio or elsewhere or in the Hain portfolio where. But our focus right now is execute this simplification, we call shrink to grow, to execute that strategy and then we give ourselves optionality.

Great. There's been a lot of talk across the industry about the challenging consumer environment, value-seeking behavior. I guess what are you seeing from your consumers, both in North America and internationally? Have you had to step up promotions in order to drive volume? And are you seeing any changes in promotional effectiveness?

We have seen in both markets, the consumer definitely feeling the pinch from inflation to varying degrees. We definitely saw a much more acute value-seeking behavior in Europe. It definitely affected private label to brand. We happen to play in both private label and brands. So we benefited in those categories. We're now seeing inflation rates stabilize a bit, and we're starting to see some of that consumer behavior come back. But our focus is still making sure we have right assortment in the right places at the right price point. In the U.S, we actually didn't see the kind of trade-off to private label in the categories we play in. But what we did see was value-seeking behavior to where they shop. And that was where I think Hain has historically been challenged because we weren't really distributed across the marketplace, and that's been something that our commercial teams have been focused on. I would say, as we go forward, we feel really good about what we're seeing with consumer behavior coming back into natural products. So those that would have followed in better for you. Pre-COVID, you would have seen natural categories outpaced conventional categories. Then in COVID, it reverted and we heard all of the demise to better for you, nobody's going to buy better for you anymore. Reality was people were shopping in fewer places. -- and they were making very discrete shopping and purchasing choices. You also had supply chains that were dramatically impacted. We're now seeing in the Circana data that natural products is coming back across certainly the categories that we're in. So we feel good about the consumer tailwinds to what they're seeking in terms of product attributes. But then when we look at promotional activity, we're probably in a little bit different spot because we are under-indexed in distribution. So our trade dollars are largely spent to be able to get distribution and feature and display, less so in driving velocity where we already have distribution. Our issue is getting the distribution. I tell people all the time, we have [ beloved ] brands. We just make it super hard for you to find them. So we're focused on get those products within arm's reach of the consumer so that when you are seeking a Better-For-You option to your traditional categories, we are your option.

Got it. And you outlined 3 growth categories in Hain Reimagine, snacks, baby and kids and beverages. Maybe you can talk a bit about the growth drivers of each of those.

So I'll start, and then I'm going to flip some over to Lee. In snacks, obviously, it's distribution. We've got 3 great brands with -- in the North American market with Garden Veggie with Terra and with Garden of Eatin. And we have 3 growth drivers for each one of those. And our focus across our entire business when we drive growth is going to be drive distribution, put all the right products, core assortment in all the right places in the right pack size. It's going to be innovation, but not innovation just for innovation's sake, but innovation that can work. We look at an innovation renewal rate of somewhere between 8% and 10% of our growth should come from innovation or product born in the last 3 years. Historically, Hain's been somewhere between 4% and 5%. So we had a need to get fewer, bigger, better and innovation that's launched right and then supported post launch in a way that will break through. And then the third bucket is brand building. And I think I heard that from every investor when I started was, well, you're not spending enough to support your brands. And you heard me say, I want to spend better before I just spend more. So we target for different brands. We want to be probably somewhere between 5% and 6%. We want to be spending to support our brands, but I want our working marketing to work harder. I don't want it to all be a nonworking spend. And so we've been focused on get better before we just get bigger. And that's really on all 3 of those growth categories. But I would say in snacks, it's going to be driving distribution and it's going to be innovation. That's what you'll see. In beverage in the North American market in Celestial, it's going to be about leaning very heavily into black and green tea, which is where we're under-indexed. We are really strong in herbal, but we have an opportunity in black and green. We also have an opportunity in making sure our brand building breaks through. We have a brand-new master brand campaign that comes out in October. I can't wait to hear everybody's reaction to it because we're super excited. They really leans on taste. And we think that, that's a place where Hain-Celestial leans in and certainly, Celestial Seasonings delivers on great taste. And Baby Kids we need to be parent's best partner. And so we will start probably with brand building, then it will be in driving distribution and the regain for infant formula and then it's going to be around our innovation pipeline. But in the U.K. Ella's Kitchen, 53% of new parents connect to our -- become a friend campaign or become a friend program to connect with Ella's when they become first-time parents. Having 53% of new parents connect with your brand right away, we are parent's best partner in advocate. In the U.S., we see an opportunity to do the same thing with Earth's Best, where we are there with parents on their journey from birth to backpack. So how do we help you and your kids are born, how do we help you in they're learning, how to eat new foods? How do we get them to explore flavor and format? And then how do we get them when they go back pack and they're on the go, and you can still feel good about them with what they have in their backpack.

Great. Thank you. You mentioned infant formula before. We know supply has been a challenge for some time. Maybe you can provide us with a bit of an update of the challenges behind you. Do you believe the supply challenges have done anything to maybe damage the Earth's Best brand work your relationships with consumers.

Well, I'll start with the end. They absolutely damaged the brand, and it was damaging the brand availability. So we know that we lost substantial share over the last 2 years while we had supply disruptions and it certainly hurt us with some of our customers when you can't reliably be on shelf. They have to have a productive shelf. And so we're going back and regaining that. And to be honest, our supplier partner needed to regain credibility with us as well. So I wanted to make sure that we had assurance that they had redundant supply. We now are produced in 3 different locations that gives us some redundancy of production location. They've made substantial capital investments in those operations, and they're running well. And so we feel good that all the things we needed to see from them are in a good place. We're not producing until just recently, all the formulations that we had. We're now producing all the formulations. We're not fully into all sizes because we wanted to get good run rate in front of us before we really added more of the size complexity into it. So I think we're in a good position. You would see that over the last 2 weeks, our sales team got very aggressive and they have reached out to all of our customers, past and future to reassure them of here's what we have, and here's what we're ready to do to support it. What I have said to folks is Earth's Best is the OG of organic infant formula. We are the first and original and the only in the organic baby formula. So for parents who want organic infant formula and to be able to support their kids from birth to backpack, Earth's Best is their right partner. And so you'll see us leaning into that with our marketing campaigns as we go into early October.

Got it. Maybe you can talk a bit about the launch of Flavor Burst. I know it's one that the company is very excited about. How it's compared to your expectations, maybe what the learnings were that you'll apply the innovation going forward and how the innovation process has evolved.

First, yes, the Flavor Burst is probably the best example of the change in our overall marketing model. It was built consumer back. So we were looking to meet a consumer unmet need and what the consumers told us is they wanted something that was better for you without sacrifice. So I'm not going to sacrifice taste. I don't want to sacrifice convenience and I don't want to sacrifice affordability to have something that's a great tasting salty snack. And so we felt like the one salty snack category that really didn't have a solid better-for-you offering within the tortilla salty snack category. So it started consumer back, we actually tested every element of it. We tested the concept, we tested the food. We tested flavor. We made modifications along the way. We tested the packaging. We tested the packaging design. We tested the name of the product. And I would tell you every element of that was not what I would have chosen, which is sort of funny because I realize while I am the target audience, I'm clearly not representative of the entire target audience, but it was highly successful at launch, where I would say it has over delivered is the incrementality to the brand. So over 80% is incremental to Garden Veggie. That's really good. We see really good velocities on the product. I would say with certain retailers, our assortments are right. The number of items or flavors per retailer is where we expected it to be. Where we fell short of expectations was in trial. Because we know the consumer is skeptical that it's really going to deliver on taste. We underestimated the trial vehicles needed, and that's where you'll see us leaning very heavily into now is ensuring that we can get you to try the product because we know once you try it, then you'll buy it, but getting over that skepticism was something that we definitely learned from.

Got it. Perfect. Okay. I think we're right up against time. So maybe what we'll do is please join us in the breakout session right around the corner. And please join me in thanking Wendy and Lee for being here today.

Thank you.

Thank you.