Good day and welcome to Mondelez International’s Third Quarter 2013 Earnings Conference Call. Today’s call is scheduled to last about one hour including remarks by Mondelez management and the question-and-answer session. (Operator Instructions) I’d now like to turn the call over to Mr. Dexter Congbalay, Vice President, Investor Relations for Mondelez International. Please go ahead, sir.

Good afternoon and thanks for joining us. With me are Irene Rosenfeld, our Chairman and CEO; and Dave Brearton, our CFO. Earlier today, we sent out our earnings release. This release and today's slides are available on our website mondelezinternational.com. As you know, we will make forward-looking statements about the Company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K and 10-Q filings for more details on our forward-looking statements. Some of today’s prepared remarks include non-GAAP financial measures. You can find the GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. With that, I'll now turn the call over to Irene.

Thanks, Dexter. It’s easy to forget, but we just marked our one-year anniversary on October 1st. We’ve accomplished a lot this past year and have taken a number of actions to sharpen our focus and straighten our capabilities. In the phase of challenging economic conditions, we delivered solid results. Strong volume mix, in fact the strongest in our industry. Accelerating growth in emerging markets in line with our double-digit target, strong market share performance in four of our five regions and double-digit adjusted EPS growth at constant currency. We are also taking some major steps to improve margins. Cash flow and return on invested capital. As we detailed a couple of months ago, we’ve identified significant supply chain savings. Together with reducing overhead, these savings underpin our margin improvement targets, including gains of 500 basis points in North America and 250 points in Europe by 2016. We’ve also authorized a $6 billion share repurchase program, and increased our quarterly dividend. In fact so far this year, we’ve returned nearly $1.5 billion to our shareholders. At the same time, we’ve had some challenges. Our revenue growth was solid, but it was below expectations. This is due in part to factors outside our control, like the precipitous slide in coffee prices and the slowdown in global categories. But other challenges rest squarely on our own shoulders. As you know we’ve some speed bumps in Brazil and Russia last year, just as we came out of the spin. But in the matter of months we identified the route causes and implemented effective solutions. Both Brazil and Russia have rebounded well and are now growing in the mid to high teens. However, as you read in our earnings release, like many of our peers, we’re now facing some headwinds in China. In a global…

Thanks, Irene. As Irene detailed earlier, weak China performance tempered our Q3 results. For Asia-Pacific region overall organic revenue growth was flat in the quarter with vol/mix gains essentially offset by lower pricing in the developed part of the region. While revenue was up 3% year-to-date, we expect Q4 to be down low single digits due largely to issues in China. The region's emerging markets were up mid to high single digits year-to-date tempered more recently by slower China growth. In contrast, India was up mid teens with new capacity now on stream, our chocolate business grew more than 20% in Q3 in line with continued robust category growth. Additionally, the region's power brands grew 11%. With the notable exception of Asia-Pacific, however, our four other geographies delivered solid results in the quarter. In Latin America, organic revenue was up about 17% in the quarter and 13% year-to-date. Despite a persistently weak economy, softening category trends and consumption declines, our business in Brazil has grown mid teens year-to-date. Incremental investments in A&C have delivered attractive returns driving strong vol/mix and high teens growth in the rapidly growing North East region. Share performance in Brazil remains solid with particular strength in chocolate. Outside Brazil, pricing in the inflationary economies of Venezuela and Argentina drove most of the growth. Our teams there have done a good job of responding to the challenging economic conditions, but we have a cautious outlook for these markets due to the volatility. Importantly, share performance in Latin America was strong with more than 70% of our revenues gaining or holding share. Finally, the region's power brands increased 15% led by Lacta, Club Social, Oreo, Halls and belVita. Turning to EEMEA, organic revenue grew 13% in the quarter and nearly 10% year-to-date. Strong vol/mix gains of 16 percentage…

(Operator Instructions) Our first question comes from the line of Bryan Spillane with Bank of America Merrill Lynch.

Hi, good afternoon everybody.

Hi, Bryan.

Just two questions, one to Dave; just looking at how you’ve preliminarily laid out 2014, I think previously you had talked about a margin goal for 2014 at being high 12’s and assuming that also was with a higher organic revenue growth. So, should we still be thinking about that high 12’s margin for next year or is that still, is that somewhat in [ph] flux?

Well, we’re not officially giving 2014 guidance. But as I said a minute ago, I think we’re pretty confident that we have the productivity and overhead programs in place that we should be able to stick to the margin guidance we gave before.

Okay. And then just second question. Irene, you spent some time talking to investors over the last couple of months and there have certainly been a lot of discussion, debate about I guess the balance between spending in emerging markets, what the right growth rates are, pacing of cost savings. So could you just talk a bit about your experience with that? And albeit your lowering organic growth for next year, just sort of how you feel about those investments and the opportunities and if anything has changed in your mind in terms of what the opportunities are?

I think the meetings that we had with our investors were very productive and they gave us a lot of insight in terms of how they're thinking about their business and it gave us an opportunity to talk about how we see the business. If I step back, I think there were about maybe five takeaways. I think first and foremost, there was universal agreements among all of our investors that we have created a very advantaged portfolio that's got an incredible collection of grants in very fast growing categories with the nice emerging markets footprint. I think that was a fairly universal sentiment. There is no question, I'd say second, all investors believe that we have significant margin upside as we do and we've laid out very aggressive plans as you have seen particularly in our developed markets in North America. As you know we set a goal of 500 basis point improvement over the next three years which should get us to peer averages and similarly in Europe we set a goal of about 250 basis points improvement and that also will bring us actually to the high end of our peers in Europe. We did at the same time go – many investors tell us that they want to make sure that we continue to invest in emerging markets. They all see the same opportunities there that we do and the question really is just to make sure we are continuing to make those foundational investments but we're doing it prudently and at the appropriate pace relative to market conditions to make sure that we are getting a good return. I think the third point that you referenced is that a number of investors told us that they thought that our top line targets might be too…

Thanks for the insights, Irene.

Our next question comes from the line of Andrew Lazar with Barclays.

Good afternoon.

Hi, Andrew.

Irene, you talked a little bit about the need to improve upon some of the early warning capabilities that you have in some of these more volatile emerging markets. I know that last year following kind of the issues you saw in Brazil and Russia, I think that you talked about some of this back then, just remember that wasn't seen as early as maybe you would have liked. So I guess I was hopeful that we wouldn't see something come a little bit out of a blue in a big emerging market again. China, it seems like was not something that at least you were talking about or more recently whether it be on the second quarter call or in presentations you've done since then. So I'm trying to get a sense. Did I also kind of come out of a blue where you didn't have enough early warning and it's not why following Brazil and Russia, why weren't there better, I guess, controls from that perspective on China?

Well, let me answer that question in two parts, Andrew. Without a doubt as I've mentioned, we've taken a number of steps as we continue to evolve our thinking and our learning with the portfolio as it now exists. We went from a company that was almost entirely in developed markets to a one that has a very significant emerging market footprint. And as we've said, these markets have different characteristics than some of our more mature markets. In the case of China as we saw the biscuit category slowing, as I mentioned, we could see it was going from plus 18 last year to plus 3 in the first quarter and we took a number of steps to try to address the slowdown. And frankly in the second quarter, we actually saw some results. We saw second quarter the biscuit business was up 9.5% and for July frankly it was up about 4%. So we were feeling pretty good that we were able to offset that. We had very strong share performance in a number of our categories and so we really felt pretty comfortable that it could be offset. In the speed with which that plus 9.5 in Q2 became plus 2 in Q3 was really the issue that we're wrestling with. And again, the good news is we know it, we took actions, we saw it and took actions starting in August to start to pull back a little bit. But as I said in my remarks, when you have inventory plans to be at a double digit growth rate, to support double digit growth rate and it plummet down to plus 2, it just leaves us in a difficult situation. We've got over a 1,000 distributors in China and there's a fair amount of inventory in…

Got it. Well, thank you for all that detail. That’s helpful. And just one quick one, in the global category slowdown that you’ve talked about from 6.3 to 3.8 year-to-date, just was there -- was the primary change in that volume or price or is it a mix of both?

It’s a mix of both Andrew.

Okay.

And it’s fairly broad. It actually goes across all the regions. It’s not just emerging markets, but obviously pricing when it relates to coffee and a number of the other commodities have been fairly stable, but the vol mix portion of it has also been slow.

Okay. Thank you very much.

Our next question comes from the line of Chris Growe with Stifel. Christopher Growe - Stifel Nicolaus & Co.: I just have a question for you, first of all on the China business. You’ve had mentioned that, that was a factor in your -- obviously in this quarter was the reduction in your growth rate and revenue for that -- for the Asia Pacific region. It looks like its going to bounce right back though in Q4. And if heard you correctly Dave, you said it was going to -- it was actually going to be a drag on fourth quarter revenue for the Asia Pacific region. But in the slides it indicated it was going to be up nicely in the fourth quarter. So shall we put those two statements together if I could?

Yes, I think -- no, it’s not going to bounce back in Q4. In fact our Asia Pacific region will be down low single digits in Q4, mostly driven by China and it will be biscuits and mostly inventory. So we started taking inventory out of the system really in September when we saw what was coming through in the market and share data, that’s kind of playing its way through and because there is up to four different levels of distributors to get through before you get to the consumer in some parts of China is going to take us through the end of the year to do that. So it’s a double-digit decline in China this quarter. Its going to be a double-digit decline again in quarter four and that’s the biggest part of the reason why we’ve called our quarter four down. Christopher Growe - Stifel Nicolaus & Co.:

Yes, I think the -- what we’ve done as we said, given that the global categories are growing slightly under 4% today. We felt it was prudent to give you an eye to how we’re kind of thinking about going forward next year. And the guidance we’ve given a 4% to 5% is assuming we will continue to drive for share growth similar to what we’ve done this year, we will drive for share growth everywhere. That will be one of two things. It will either drive upside versus the guidance we’ve given or if we have a disruption somewhere or an unexpected events in a place like Egypt or Venezuela, it will help drive an offset. So I think by giving you guidance that’s more or less in line with the category growth as we see it today. I think it gives us room, so hopefully have upside, but at worst at least be able to offset the unexpected. Christopher Growe - Stifel Nicolaus & Co.: Okay. And then, do you have a recommended tax rate then for the year now, where you would expect the tax rate to come in?

Yes, I think it’s obviously very low year-to-date, about 5%. I think its in line pretty much with what we’ve said last time about 10% to 13%, may be a little bit lower, but in the kind of the 10% to 13% range. Quarter four, I’d expect our cash rate to be in line with what we’ve said it will be over the next three to five years, its kind of 20% plus or minus a couple of points. Christopher Growe - Stifel Nicolaus & Co.: Okay.

I think we’re not expecting any big discrete events in quarter four. Christopher Growe - Stifel Nicolaus & Co.: Okay. That sounds great. Thank you.

Our next question comes from line of Ken Zaslow with BMO Capital Markets.

Good evening, everyone.

Hi, Ken.

Just a thing about big picture question, do you think Mondelez should operate in all 80 countries or is there some non-core regions that might be worth loss to retrench from a reallocate your time and capital to other more core regions?

No, I think we’ve done a pretty good job Ken of focusing on the countries that matter most and it starts with the BRIC countries and yes that’s the biggest piece to date of our merge up, the 40% of revenue that comes from the emerging market. We’ve begun to invest in what we’ve talked about is our next weight markets, which are primarily the Middle East and Africa. But beyond that we’re not planting flags in lots of different countries. I made the point simply to give you a sense that there is always going to be something happening, it is our job however to manage that reality and to ensure that the guidance that we’re giving to you -- that we can deliver the guidance we’re giving to you.

My second question, you talk a lot about the North America and European market opportunities. Can you talk about the opportunity to restore Latin American margins, the mid teen levels? I know this year -- your sales growth has been good, your margins have come in, just is there what opportunities do you have to actually reestablish the Latin American margins back to more historical levels?

Yes, I think historical levels they’re relatively high last year because we’ve a number of one-time items last year, we had insurance proceeds, we have some asset sales. So the Latin American margins last year, we’re actually were unusually high. Having said that, I’d say that year-to-date they haven’t been the greatest because as I’ve talked on the call, on the gross margin line our gross margins were down. Part of that is it’s fairly common across the emerging markets, but as currencies have devalued, the cost of imported raw and packaging materials into those countries goes up and a lot of these markets is very difficult to hedge that. So it is the P&L almost immediately and there is a lag between that and when the pricing goes. So I think you will see the pricing come through, you will see the gross margins improve, not specifically in Latin America, I think it will be across all the emerging markets as we go forward into next year.

Great. And what interest expense should we use for the year? And that’s my last question. Thank you.

I think the -- we’ve a coupon rate of about 6% right now, but the interest expense on the P&L was down around 5.3% in the quarter, which is probably as good a rate as any right now and the reason for the gap between the coupon and the 5.3% is because as we’ve been paying off debt we’ve put more of our debt into commercial paper and short-term obviously those cost less. So it’s about 5.3% in the quarter, that’s probably a reasonable number for the year.

Great. Thank you very much.

Our next question comes from line of Eric Katzman with Deutsche Bank

Hi. Good evening.

Good evening, Eric.

Quick one and I don’t know if you said it, but your guidance on tax rate for 2014 …

We haven’t given the guidance for ’14.

…and that seems to be a big hurdle, right?

It’s probably going to be a big hurdle. We haven’t given guidance for ’14. What we’ve said in the past is that this year is unusually low from the next three to five years after this we would expect our tax rate to be 20% plus or minus a couple of points. And eventually over the very long-term it will probably go up to the 25% range. But I think for the next three to five years, its going to be 20 plus or minus couple of points. We haven’t given anything specific to 2014.

Okay. And then second question, a lot of companies have been talking about India actually slowing down and you posted very good results there. Does some of your lower revenue guidance outlook assume that India slows just -- kind of aside from the China issue?

No actually we’ve high hopes for India. In fact the challenge -- our challenge is that our growth in India has been constrained as you know because we were out of chocolate capacity. We’re now putting that capacity on stream and we should continue to see growth in line with the categories which has been growing in the high double-digit rate. So our outlook on India, it remains quite bullish and I think we’ve the programs in place. We made some significant investments in relative market as well as capacity. We’re just starting up a Greenfield. And we’re just -- we just broke ground on the Greenfield and so anyway our outlook is quite bullish.

The (indiscernible) and chocolate are still up well over 20%. So that chocolate is growing well, there are some other categories that for us is not -- are not nearly as important in India that are slowing down, but chocolate continues to be really robust.

Okay. And then, I mean, if I could ask you just the last like a more philosophical longer term question. The emerging market investments I think on the slides that you gave over the summer, although I don’t have them in front of me, because I’m on the road, but in ’14 you were going to lower those EM investments to 10 basis points from this year, which were 50 to 70. But it seems like -- in the kind of the race for market share out there and when you look at some of the very successful companies that have -- whether private or public, like Wrigley or a Coke or other names when EM markets have slowdown, that’s kind of when those companies have put their pedal to the metal and that’s when they’ve really pushed. And so why wouldn’t you -- even though you’ve got pressure from all kinds of sources these days, why wouldn’t you take the opportunity as a slower EM to actually really invest heavily and try to gain share and so if the categories do come back, you're that much – you have that much more land underneath your feet.

Yes. So we agree absolutely with your premise, Eric. As you know we accelerated some of our investments in emerging markets this year and we feel very good about the return that we've gotten particularly in markets like Brazil and Russia and India. So we will continue to do that. And because we had accelerated those investments, what we said was we didn't see the need to invest again next year incrementally, and so for that reason that's the 10 bps that you remember. So we just said we made the investments this year and in fact that's playing through in our margins and you'll see that we don't need to invest incrementally we don't believe next year while we play through and ensure that we get a good return on the sales capability and route to market investments that we made this year. We believe very strongly as you do that the opportunity to invest prudently in these markets is the time is now and we will continue to do that.

Okay. I'll pass it on. Thank you.

Our next question comes from the line of Robert Moskow with Credit Suisse.

Hi. Thank you. When I visited your team out in China, again I guess I would echo what Andrew Lazar said is that the message again there was that yes, the category had slowed for biscuits but Mondelez expected to outgrow its category, maybe just at that point you just had to keep with the corporate line but it does raise the question about these early warning systems and how much your management team was communicating internally. That's more of a statement. But I was impressed by what I saw from the infrastructure in China and I thought that you were kind of thinking of launching chocolate in China because you had a very good hot zone distribution capability building up with gum and it seemed to be setting the stage. Does your experience this year slow that down in terms of the timing of when you might launch chocolate?

Well, as you might imagine, Rob, we're not going to be talking about any things that we haven't launched. We launched them. So currently there are many wide spaced opportunities and we will pick them one at a time as we feel that the organization is ready to handle them. And at this moment I feel that the act of making sure that we get the biscuit momentum back together to continue to fuel the momentum on gum which we just launched a year ago should be and is the main focus of our China team and that's what they're doing. But there will be continued wide spaced launches over time and as we do them, we'll tell you what we've done.

Can I ask a follow-up on gum in China? I imagine it was negative in the quarter. When do you expect gum to turn positive in China, Irene?

Gum in China has been a phenomenal success. It's actually almost about a $100 million business in about a year. So we're feeling quite comfortable with the progress on gum in China. All that hot zone activity that you saw is a key driver of that success. The gum category in China is growing mid double digit rates and that is one of the reasons we launched there. And so we feel quite good about the performance there and frankly gum in all of our emerging markets continues to grow for the most part. The issue, as you know, has been in our developed markets and the good news is we're starting to see some good traction on share improvements as we've put our playbook in place.

So despite the tough comp to Stride year-ago launch in third quarter, you were still up versus that tough comp a year ago?

That's correct.

Okay, got it. Thank you.

Our next question comes from the line of Matthew Grainger with Morgan Stanley.

Hi. Good evening, everyone. In developed markets you've talked about supply chain, cost reduction opportunities on both the manufacturing side and also in terms of removing some of the SKU complexity from the business. And I understand what the hurdles are, the uncertainty around timing and addressing some of the less efficient manufacturing capacities, but if you wanted to more aggressively go after margin improvement in North America and in Europe, is there any opportunity to accelerate the portfolio simplification aspect of the plan?

Yes. The plan we've laid out so far is 500 basis points of margin improvement in North America and as you've talked about the supply chain is a key part of that. And we've started construction of the plants in Mexico. That's a key part of it. I think simplifying the portfolio is a key part of that. We've already accelerated by about a year the speed of which we'll get the 500 basis points. We'd originally said it would take us to 2017. We've now brought it back to 2016. The 500 basis points through is programs we have in our sites, we have milestones and action plans and accountabilities against that. We know how to do it. If there's ways to accelerate beyond that, we're continuing to look at those and obviously we'll pursue those. So what we've given is a 500 margin point objective is what we know we can achieve and it is based on some of the stuff we've talked to you earlier. We're clearly happy to accelerate. We've already launched it. If we could do it again, we would. If we can go further, we would. And we'll continue to look for those types of opportunities.

Okay. Thanks, Dave. And Irene, I just wanted to get your thoughts on category growth dynamics for biscuits within the U.S. Obviously Mondelez has continued to do extremely well but I think we're starting to see the categories themselves flow a bit along with the rest of the center of store. Do you see sort of low single digit growth in those categories as the new normal for a while or have you observed anything in terms of the phasing of innovation or merchandizing across the competitive sets that you think is weighing on the category growth?

Well, that category growth actually is quite solid relative to many other categories in North America and in the U.S. and I've been very pleased with the share performance that our team has delivered and we see continued opportunity as we leverage the strength of our brands and we leverage the strong DSD selling organization that we have. We see continued opportunity to pick up share, so that's been a business that's growing. Our biscuit business in the U.S. has grown over 5% for almost – I think it was the ninth quarter that it's grown over 5% and we feel quite good about the outlook there. So the category has been kind of a [indiscernible] in the mid single digit range but we've been able to grow in excess of that as a result of our strong brands and our strong programming and our strong execution.

Okay. Thank you again.

Our next question comes from the line of Alexia Howard with Sanford Bernstein.

Good evening, everyone.

Hi, Alexia.

Can I ask another question on the margin trajectory not just in North America but you've obviously got some quite big goals in place for margin expansion over the next few years? As you think of the levers that are really going to get you from here to there, could you tell us a bit more about what the biggest ones are? Is it mostly cost saving? Are you looking at cost of goods sold or input cost moderating a bit from here? Is that positive mix from innovation worked in? Could you just give us some flavor of what's really going to – which are going to be the drivers that will really help you out there? Thank you.

I guess I'll start with on the commodity in Forex side, we're really only looking to price to recover commodity in Forex. We won't be looking to increase margins as part of our strategy to get there. If there's opportunities clearly we'll take those, but our assumption is we price to recover commodity in Forex so that's kind of a wash. It's really driven by a combination of mix, as you say, things like convenient coffee have higher margins, the power brands have higher margins so we'll continue to drive that and we can control that. Overheads have been the biggest source of our margin improvement over the last three years. We've driven about a 3 point margin improvement between 2009, 2012 that was entirely driven by overheads. And I think overheads just by virtue of how quickly you can undo those versus the supply chain programs will continue to be a key driver of our margin progress through 2014 and into '15. And on the third piece is the supply chain savings and that's the program Daniel Myers talked about at the Back-to-School Conference and we have a pretty comprehensive plan on what is our long-term vision and how do we stage ourselves towards that in both Europe and North America. That's the key part of getting there as well, and so I remind you the biggest gap between our margins and our peers' margins isn't gross margin, it is actually in overheads. Overheads is always an opportunity. We'll continue to drive overheads and particularly given our size, we think there's more opportunity there and we'll go after that. But the gap versus our peers is really in gross margin and that's what Daniel talked about in September. So it's everything you mentioned frankly with the exception of price and pricing is really just to cover commodities in Forex.

Great. Thank you very much. I'll pass it on.

Our next question comes from the line of Ken Goldman with JPMorgan.

Hi. Can you hear me?

Yes, Ken.

Okay, great. Irene, I’m hearing a theme today that the breadth and complexity of the business sometimes either makes it harder to turn a problem around or perhaps add some execution challenges at times -- our times. But I guess the reason for the split up was to minimize some of that complexity. So is it still a bit of a problem, at what point does it perhaps indicate you’re considering making things even simpler, and I’m thinking specifically whether you might more strongly consider divesting your coffee and grocery businesses now which in fact you’re holding back your top line anyway at this point.

Well, look I’m not going to comment on portfolio actions. Well, I want to clarify my comment about the fact that we are in 80 countries. It was simply to make a point that there’s always thing’s; there’s different things going on. As I said though it's our job to manage that and particularly as emerging markets become and are a bigger pipe of our portfolio they’re volatile. They don’t always deliver their results in a straight line. Egypt went from growing 29% in the second quarter to minus 3% in the third quarter. And so we just need to have a robust enough target to make sure that we can accommodate that. And again that’s why we gave you our perspective as we look forward, because our categories continue to grow in excess of other food categories, but they are growing at a slower rate. So, this is not about complexity. It is about the fact that it's a robust step of countries and categories. As a result of the split as you point out, it's quite focused and we feel quite comfortable that we have the tools in place to be able to manage that complexity. But it is a different set of countries that are driving our performance today than used to be driving our performance as Kraft Foods and we need to accommodate that and that’s what I have talked about.

And then quickly in coffee, why does your EBITDA not benefit from lower costs. I mean, Smucker’s does for example, maybe the answer is that Europe is different than the U.S. but I thought we might pass that to your customers less than a 100% of your deflation.

No, I think it's -- yes it is different than the U.S. and there is a different dynamic there. In most of Europe there are many competitors in every country all of which were to keep the market fairly disciplined. We don’t tend to loose margin on the way up. We don’t tend to gain margin on the way down. It does tend to be a pass through both directions. And our customers keep us on it and our competitors keep us on it, and that’s just a dynamic in Europe. I’ll admit, when I started in Europe 20 years ago it was different. It was actually very much like the U.S. market, but it's a fairly competitive market place. So it's doesn’t, it's not a -- you don’t get windfall profits up or down; you tend to pass it through and manage the margin at a fairly constant dollar level.

Got it. Thank you.

Our final question comes from the line of David Driscoll with Citi.

Great, thank you. Good evening.

Hi, David.

Hi, David.

Two little tiny ones and then unfortunately a China question. The two little tiny ones, inflation in the quarter what was -- it's just gross inflation in the quarter and what do you expect it to be for the year, and then the same thing for productivity. I think you said productivity in the quarter was 3.5 points. What's the productivity on the year?

Yes, I think on the productivity we said it was about 3% net. It was actually about double that on a gross level. So it's certainly the highest we have done. We had said that on the year we would actually expect the average for the year to be in sort of the 2.3%, 2.5% range is kind of what we said in September, because the first half is only about 1.5%, so that’s productivity. Inflation, obviously it varies dramatically from the 40%, 50% in places Venezuela through virtually none in Europe. But I guess on average it's probably in the 3% to 5%, but I’ll be honest, I don’t add that up in a very frequent basis.

Okay, because it's a strange mix of commodity coffee in Europe and then the inflation of Hershey’s in South America.

Yes, and it currently has a huge impact.

All right. I appreciate the complexity there. On China, GDP growth in the second quarter and the third quarter had been relatively consistent for the country and I think 7.5% and 7.8%, gum is growing terrific mid double digits, I think it's what you said Irene. So none of these facts seem to help understand kind of why the China biscuit category slowed to just 2%. So really, if I just try to get it's a little bit more what the consumer insight as to why is there a Chinese gifting issue? Sometimes we hear about the quirks [ph] on gifting? And then maybe bigger picture really trying to pull insight as to why it slowed down. I got to believe that that's what's driving your comments being that the China business, the biscuit operations will continue to be slow into 2014, but I'd really just like to understand a little bit more as to the consumer insight?

Yes, well, I mean the GDP facts are correct and that's why we really did expect it that we could see the recovery. It is a reality that we have seen the key gifting occasions underperform relative to the year-ago comps. So we saw a slow Chinese New Year, we saw a slow autumn festival and so there's no question that some of the government policies are impacting gifting in particular, and biscuits is a big gifting item as you've said. So there is no question that there is some impact that these government policies is having on our business. And our job here is to figure out, therefore, how do we overcome that? And we're taking a number of steps to improve our pricing in sizing, we're looking at opportunities to make sure that our impacted point of buying is where we need it to be. So there's a number of actions that we're taking that we believe can help to offset it and will get the momentum back. But in the short term the fact is we've got more inventory out there as a result of the fairly precipitous slowdown in our biscuit category and we just need some time to work that through and that will probably take us through the end of the year.

I really appreciate the comments. Thank you.

All right. Thank you very much. We are out of time right now. Nick and I will be here to answer any questions later this evening and of course through the rest of the week. Thank you.

Thank you. This concludes today's conference call. You may now disconnect.