The J. M. Smucker Company (SJM) Q3 2012 Earnings Report, Transcript and Summary

Sonal P. Robinson - Director of Corporate Finance, Vice President of Investor Relations and Assistant Secretary Richard K. Smucker - Chief Executive officer and Director Vincent C. Byrd - President, Chief Operating Officer and Director Mark R. Belgya - Chief Financial officer and Senior Vice President Paul Smucker Wagstaff - Director and President of U.S. Retail Consumer Foods Mark T. Smucker - President Of Us Retail Coffee And Director Steven T. Oakland - President Of International, Foodservice And Natural Foods

Eric R. Katzman - Deutsche Bank AG, Research Division Edward Aaron - RBC Capital Markets, LLC, Research Division David Driscoll - Citigroup Inc, Research Division Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division Charles Edward Cerankosky - Northcoast Research Andrew Lazar - Barclays Capital, Research Division Scott Andrew Mushkin - Jefferies & Company, Inc., Research Division Farha Aslam - Stephens Inc., Research Division Kenneth Goldman - JP Morgan Chase & Co, Research Division Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division Jason English - Goldman Sachs Group Inc., Research Division Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division Robert Dickerson - Consumer Edge Research, LLC Mitchell B. Pinheiro - Janney Montgomery Scott LLC, Research Division

Good morning, and welcome to The J.M. Smucker Company Third Quarter 2012 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded. [Operator Instructions] I will now turn the conference over to Sonal Robinson, Vice President of Investor Relations. Please go ahead, Ms. Robinson.

Good morning, everyone, and welcome to our third quarter earnings conference call. Thank you for joining us today. On the call with me are Richard Smucker, Chief Executive Officer; Vince Byrd, President and Chief Operating Officer; Mark Belgya, Chief Financial Officer; Steve Oakland, President, International, Foodservice and Natural Foods; Mark Smucker, President, U.S. Retail Coffee; and Paul Smucker Wagstaff, President, U.S. Retail Consumer Foods. After this brief introduction, I will turn the call over to Richard for opening remarks. Vince will then provide commentary on the dynamics occurring within our business segments, and Mark will close with additional comments on our financial results for the quarter and our outlook for the year. During the call today, we may make forward-looking statements that reflect the company's current expectations about future plans and performance. These forward-looking statements rely on a number of assumptions and estimates, and actual results may differ materially due to risks and uncertainties. I invite you to read the full disclosure statement in the press release concerning forward-looking statements. Let me also remind you that the company uses non-GAAP results for the purpose of evaluating performance internally. Additional discussion on non-GAAP information is detailed in our press release located on our website at smuckers.com. A replay of this call will also be available on the website. If you have any follow-up questions or comments after today's call, please contact me or Mark Belgya. I will now turn the call over to Richard.

Thank you, Sonal. Good morning, everyone, and thank you for joining us. By now, you have seen our financial results for the third quarter, which were obviously below our historical performance levels, as well as our and your expectations. On today's call, we will provide an update on the dynamics that challenged the business in the quarter and discuss our plans to address the issues going forward and why we remain optimistic and confident in our plans. First, to ground everyone. We now anticipate cost increases in excess of $500 million for the full year, which we have been covering primarily with price increases, along with expense cuts and productivity gains. To put this into perspective, our net pricing increased approximately 16% for the quarter, which we believe is more than double the average inflation rate in the food sector. With leading brands in most categories where we compete, we have maintained price leadership and transparency with our retailers and have been responsible with both price increases and decreases when commodity cost warrants such adjustment. Although we expected volume to decline during the quarter, the magnitude of the decline was unexpected. Consumer takeaway declined sharply in a number of our categories during the Fall Bake and Holiday season. This is consistent with IRI data, which indicated that year-over-year, the overall volume of food and beverage sold through measured channels decreased 4% for the 12-week period ended January 22, reaching a new 5-year low. This time period, of course, aligned fairly closely with our own quarter. Other factors, notably, significantly higher price points on a number of our key items, consumer pantry loading of peanut butter ahead of our November price increase, a reduction in retail inventory levels and aggressive pricing by a few key competitors and retailers further impacted the volume shortfall. In a moment, Vince will discuss these dynamics as they relate to our 3 largest categories. Sell-through was disappointing, considering we entered the period with sound marketing and merchandising plans in place, as we discussed on our call last quarter. As our marketing and sales teams performed post-holiday reviews, we saw an increase in the number of bake centers and Smucker items included on these bake centers as we expected. In addition, our holiday advertising and social media were well executed. The difference played out in the actual consumer takeaway relative to what we had expected from our promotional activities. For example, in our core Folgers Coffee offering, this year's promoted price point of $8.99 was 30% less than the un-promoted everyday price, but it was substantially higher than last year's promoted price of $6.99. As stated, we expected the volume to be down somewhat, but it was down greater than we thought. Having identified the reasons for the overall volume decline, we are actively addressing the issues with pricing, along with taking other actions aimed at strengthening the business. First, let me say that we do not view our quarter's results or the consumers' behavior as fundamental changes that would affect our business model. We want to emphasize that we are confident in our long-term strategy and expect the consumer to adapt to adjusted market prices over the coming quarters. Over the past several months, commodity costs have generally declined, with the exception of peanuts and sugar. Coffee, which is our largest purchase commodity, has seen recent Arabica futures average around $2.20 a pound. This compares to over $2.75 a pound just a few months ago. If costs continue at the current levels, we would likely take a coffee price decrease early in fiscal 2013 and expect a positive volume impact from this action. As commodity costs moderate, we will continue evaluating opportunities to adjust pricing and promotional activities in other categories as well. We also continue to invest in our brands, and we use the consumer analyst group of New York's conference next week as an opportunity to provide an update on a number of new products and marketing initiatives. While the quarter was challenging, there were a number of key accomplishments. First, we closed the acquisition of the Sara Lee North American foodservice hot beverage business in January and are making great progress on integration. We have targeted May 1 as the date we plan on transitioning customer ordering and invoicing, manufacturing and green coffee processes onto our systems. Second, our Pillsbury Baking business was strong this quarter, further strengthening its position as the #2 brand in the baking category, gaining nearly 2 share points during the most recent 12-week period. Third, our brands outperformed significantly the closest competitor in most of our categories, as measured by share of market. And in general, our market share remained strong across most of our categories. Fourth, K-Cups continued on its growth trajectory, with sales in the U.S. increasing $38 million or approximately 180% over last year. We expect to achieve over $160 million in K-Cups sales this year. And finally, as Mark will further explain, we increased our cash flow significantly during the quarter, providing additional liquidity for growth and shareholder return. Before I turn the call over to Vince, I would like to acknowledge the efforts of our team. During challenging times, our employees persevere and work their hardest. We thank them for what they have done and for what they will do as we move forward. I would also like to welcome our new employees from Sara Lee to the Smucker Company. While our tactics may change, we are confident in our strategy of owning #1 brands sold in the center of the store. As we have reiterated many times in the past, we are focused on long-term growth and building our brands for the benefit of all of our constituents. With that, I will now turn the call over to Vince, who will share more detail on the performance of key brands and categories, as well as some exciting news about our relationship with Green Mountain Coffee Roasters.

Thank you, Richard. Good morning, everyone. Although net sales increased 12% in the quarter, we are disappointed in the 10% volume decline that was primarily due to mainstream coffee, peanut butter and oils. As Richard noted, in addition to the unfavorable consumer trends, the primary factors affecting our results were: first, higher promoted and un-promoted price points during the holiday period as a result of our price leadership actions; second, consumer pantry loading of peanut butter in advance of our price increase was greater than we had originally estimated; third, selected retailers chose to reduce inventories significantly over what we have experienced in the past, as well as use their private label to drive traffic during the holiday period; and finally, although our teams monitor and adjust our tactics real-time, in many cases, we made conscious decisions not to take short-term irresponsible pricing actions to meet competitive pressures that would have resulted in negative returns. Having said that, we remain optimistic for a number of reasons including: the overall contribution of new products across the portfolio; the moderation of costs for many of our key commodities; our share of market remains healthy; the growth opportunities from the recently acquired Cafe Bustelo and Cafe Pilon brands and the Sara Lee foodservice business; and finally, the significant progress being made on our key supply chain initiatives with all milestones remaining on track. Now let me provide some more details on the segments, starting with U.S. Retail Coffee. The ongoing stratification of the consumer base was very apparent in our results this quarter. At one end of the spectrum, our Folgers value offering, which we call opening price point, experienced a 67% volume increase over the prior year. This product is typically priced approximately 30% less than our core Folgers Classic Roast. At the other end of the spectrum, K-Cups sales were nearly $60 million for the quarter or nearly 3x the sales of the prior year. Also, our Dunkin' premium [ph] -- Dunkin' Donuts coffee brand realized 4% volume growth, reversing 3 consecutive quarters of volume decline. Incremental sales of Dunkin' Donuts seasonals drove the increase. In the middle of these 2 ranges is where we saw the higher price points have the most effect on consumer behavior impacting our core Folgers roast and ground business. This was the primary driver in the overall volume decline for the segment. Aggressive private label pricing at certain key retailers also contributed to the decline. Coffee segment profit decreased for the quarter as a result of the lower Folgers volume and the impact of significantly higher green coffee cost. Despite the challenging quarter, we increased our marketing expense 4% over the prior year's third quarter. As a reminder, last year's segment profit was an all-time record high in terms of dollars. As we look into the fourth quarter, we expect overall volume to be down versus last year but improved from the third quarter. We expect strong contributions from Rowland brands and the continued K-Cup growth. With these factors, combined with moderating green coffee costs, we expect a quarter-over-quarter increase in segment profit for coffee. Finally, within coffee, we are pleased to announce we have reached an agreement with Green Mountain Coffee Roasters to include the Folgers Gourmet Selections and Millstone brands as part of the new Keurig Vue brewing system. This will allow us to continue with our current K-Cup business while expanding our branded presence into this new single-serve platform. We look forward to sharing more details around this exciting opportunity with you in the future. Turning now to Consumer Foods. Sales and segment profit increased 7% and 4%, respectively. Starting with peanut butter, volume was down double digits, while profits were up. While we effectively managed customer volume, it appears there was consumer pantry loading during the second quarter due to the high level of media coverage in advance of our price increase. In addition, we were impacted by a competitor who promoted back much of the price increase and kept the everyday shelf price below $3. Looking forward, we believe our prudent actions taken to manage challenges related to the 2011 peanut crop have positioned us well. We remain comfortable with our peanut supply heading into the remainder of the fiscal year. Turning to Crisco. Despite outstanding display activity, our base oil business continued to be impacted significantly in the quarter by aggressive private label price points at a few key retailers. Additionally, the average price gap during the quarter for our 48-ounce Crisco offering widened considerably from the prior year, exceeding our optimal gap objectives. As a result, we are currently evaluating opportunities to address the gap going forward. During the quarter, the Pillsbury brand realized strong sales growth as a combination of new products and strong sales of baking mixes led to an overall increase of 28%. This growth has been led by the distribution gains and the continued success of our seasonal offerings, along with a more stable competitive pricing environment, all of which has contributed to market share increase. Looking at the remainder of the year, volume within the Consumer Foods segment will continue to be challenged, resulting in similar overall volume decline as in the third quarter. Additionally, peanut costs will be significantly higher in the fourth quarter. As such, quarter-over-quarter segment profit is expected to decline. For the International, Foodservice and Natural Foods segment, excluding the impacts of acquisitions, divestitures and foreign exchange, net sales increased 5%. Price increases more than offset a 9% decline in volume. Volume gains in Folgers Coffee were more than offset by declines in natural beverages, Bick's pickles and Five Roses flour. As anticipated, the reentry of private label offerings into the pickle category in Canada drove a decline in our Bick's pickle brand. In addition, shortages in the supply of organic apples impacted the performance of our Natural Foods business. Excluding the impact of an impairment charge in the prior year related to the previously owned Europe's Best business, segment profit was down 17% primarily due to the lower volume. As we look ahead, we anticipate a solid finish to the fiscal year in this segment, driven by our Canadian Natural Food business and the addition of the Sara Lee's North American foodservice hot beverage business. I will now turn the call over to Mark to discuss our consolidated results and more importantly, the outlook for the year.

Thank you, Vince. Our net sales increased $155 million, reflecting a 16% impact of net price realization, offset somewhat by the 10% volume decline. Acquisition debt at $60 million or another 5%, and sales mix was modestly favorable. GAAP earnings per share were $1.03 this quarter and $1.11 in the third quarter of last year, including restructuring and merger integration costs. Excluding these special project costs, earnings per share were $1.22 this quarter and $1.27 in last year's third quarter, a decrease of 4%. The impact of one-month ownership of the Sara Lee business was immaterial as expected. As a reminder, last year's results included $0.10 per share of impairment associated with certain assets at the previously owned Europe's Best business. SG&A expenses once again increased at a lesser rate than sales, up only 5% for the quarter. Total marketing expense was 4% above last year. Expenses associated with Rowland Coffee and the Sara Lee business were the primary drivers of the increase. The effective income tax rate was 34.1% in the third quarter compared to 32.6% in the prior year. We expect the fourth quarter and full year effective tax rate of approximately 34%. Turning to cash flow. Our cash from operations set a quarterly record, increasing $409 million in the quarter. This was mostly due to a $220 million reduction in working capital, resulting from the completion of the Fall Bake and Holiday season's transaction cycle. Capital expenditures were $61 million in the quarter, bringing the year's total to $197 million. This resulted in free cash flow of $348 million. We are still projecting approximately $270 million in CapEx for this year, which falls within the original range provided earlier this year. Let me now comment on our outlook for the remainder of this fiscal year. As a result of the impact of the third quarter results and an expected continuation of the volume declines in the fourth quarter as compared to the prior year, the company is lowering its net sales estimate and earnings guidance for the year. Net sales for the full year are estimated at slightly above $5.5 billion, up 15% over fiscal 2011. Based on this guidance, our fourth quarter net sales are also expected to increase approximately 15% over last year's fourth quarter and assumes a high single-digit volume decline. Full year non-GAAP income per diluted share is expected to range from $4.60 to $4.65, down from the company's previous range of $4.90 to $5. As a reminder, the range includes $0.07 loss on the divestiture of the Europe's Best business in the second quarter. The company's estimate reflects an immaterial amount of net earnings contribution from the Sara Lee foodservice acquisition completed last month and the current number of shares outstanding. I would like to conclude with a few comments related to next year. At this time, we are not in a position to provide guidance for 2013. However, there are a number of factors that we believe will be net positive to next year's EPS. While we expect some uncertainty around volumes for the next couple of quarters, we would expect overall growth in the base business for the coming years. In addition, we expect to benefit from lower cost on coffee and certain other raw materials, a full year's ownership of the Sara Lee foodservice business, above-average growth of the Rowland brands and K-Cups, additional savings from our supply chain projects, notably in coffee in Canada, and any future share repurchase activity. We would expect these items to contribute enough to more than offset anticipated headwinds, including higher peanut and sugar cost, the impact of a full year's interest expense related to last year's October's public debt issuance and higher pension cost. We will, of course, provide 2013 guidance in more details around each of these when we release year-end results in June. With that, we would like to open our call to your questions. Operator, if you would please queue up for the first call.

[Operator Instructions] Our first question comes from Eric Katzman with Deutsche Bank.

I guess it's just a bit surprising to see the company mentioned last quarter that it had gained share across 80% of its business whereas this quarter, that obviously was flipped on its head. And I guess we all know that the volume weakness across the industry is problematic, but why do you think the company was so -- I guess, was caught so flat-footed versus competition in the last couple of months? And then obviously, I have a follow-up.

Eric, this is Vince. Let me start again by -- and then, I'll turn it over to the Presidents. I think we were very optimistic going into the quarter because we knew that we had very good merchandising plans put into place. And although, as we said in our formal remarks, we anticipated that there would be some volume decline, certainly, we did not expect it to be at the levels that end up occurring. And again, that was primarily driven by our price points. We performed better than our elasticity models had indicated, and we also performed better than our #1 branded competitor in most of our categories during the period. But to be very honest, we started to see the tail-off in the last 4 to 5 weeks when we had some visibility to some share information, some inventories with our VMI customers, and so that, in fact, was a signal that the sell-through during the holiday period wasn't where we had hoped that it would be. You also are very rare of how much the consumer industry down or the CPG industry is down, but you have to keep in mind that our pricing actions were nearly 2.5x that of the overall industry. And then lastly, as I mentioned quite frankly, although we have experienced inventory reductions by some major competitors, previously, it far exceeded what we've experienced over the last couple of years or ever. And so I guess, I would stop there and say that's the primary reasons overall.

Well, this is Richard. I would also say that our volume was down in the 10%, but our units were down 8% because there was a shift in terms of sizes. People bought smaller sizes because of the price points. It's a little bit of sticker shock on some of our promoted prices versus last year. And so I think the consumer needs to adjust to those.

Do any of the operating heads want to comment? Or shall I just do on a follow-up?

Just do a follow-up, and we'll take it -- we'll answer specifics, Eric.

Okay. Well, I guess obviously, somewhat related to the first question, market share is one of the most expensive things to lose and therefore, one of the most expensive things to recover. It sounds like you're saying that your market share performance wasn't too bad in the quarter, and then other players suffered even more. That's hard to believe, but I guess we'll see as some of the players report results in the next couple of weeks. But can you give any kind of sense as to how much of the commodity rollover you feel like you're going to have to put back into the market to, let's say, stabilize share, let alone keep your -- or keep your market shares flat to up?

Yes. So I think, Eric, if you look at our share overall, I mean, again, we are in pretty good shape. And again, if you compare that to our #1 competitor, when you roll it up across all the categories, during that 12-week period, we significantly outperformed them. Obviously, we know, I think, the crux of the issue is at the price points. And as we see some moderation of some of our key commodities, we know that there are thresholds that we need to get back to, and that's why we feel confident going into the future periods with the moderation of the commodities that will allow us to drive down some price points to where they need to be. So overall, our share remains pretty solid. We were down more than the category. If you look at units, there's no question. But again, we significantly outperformed our #1 branded competitors.

We'll take our next question from Ed Aaron with RBC Capital Markets.

So obviously, the elasticities had been just surprisingly good before this, so I think everybody is just trying to get a sense of whether this is kind of a new norm. And obviously, you don't think it is. But just to kind of help clarify some of your comments, can you help us understand how much you think that the retailer inventory destocking affected the quarter specifically? And then also, what leads you to think that the peanut butter was more reflective of pantry loading being more aggressive than you thought as opposed to this category maybe being just a bit more elastic to very high price increases like we've seen?

That first part of your question, the answer is we believe it was between 1% and 2% volume for the entire quarter was affected by the inventory reduction. And Paul will take the peanut butter.

Paul here. On the peanut butter side, obviously, we -- as the volume was down more than we are anticipating, we did have the higher price increase go into effect in November. We had some pantry loading that occurred more than we anticipated in October, and that was really driven by the media attention that was going on that time on the peanut crop and the overall potential for peanut shortages, et cetera. And so as the consumers lower their pantry, we would expect to see some of that come back at the later -- latter part of the quarter. And we haven't seen that come back yet, and I think part of that is driven by the fact that the full price increase went into effect January 1. So there is some of that sticker shock that still exists.

Okay. And then just, my follow-up on -- in terms of the sell-through, some of your peers have been putting up numbers that are better than what the kind of the measured data would suggest and would indicate that the gap between the non-measured and the measured channels is kind of widening. Do you -- your numbers don't really suggest that, that is relevant to your business, and I'm wondering if -- how you're viewing the non-measured channels in the last quarter and going forward?

Well, typically, we over-index in non-measured channels, to be honest with you, so given that our business was soft, it was soft in some of the non-measured channels.

Our next question comes from David Driscoll with Citi.

Just wanted to follow-up on the coffee. You made some comments here on the forward forecast in terms of your expectations that things get better. But perhaps, I just like to hear your thought process on -- as green coffee prices decline and they're already down significantly from their prior peaks earlier in '11, and as volumes in the category are weak, do you anticipate an orderly decline in retail prices across the category? Or if I say this a little differently, why shouldn't we expect some of your competitors to pressure your business with aggressive coffee price reductions?

This is Mark. First of all, I think we do expect that coffee prices we have seen, except in the last few days, have been relatively consistently declining. And although we won't comment specifically on our position, we do view that we will continue to look at targeted spend in certain segments of the category and would anticipate that we would likely be able to take a measured decline in the beginning of our next fiscal year. We would assume, based on some of the information that we have, that our competitors would be in a similar situation, but we will keep an eye on that, and we will respond accordingly.

And then 2 brief follow-ups, just the -- on coffee, the year ago, Mark, can you remind me -- in the year-ago period, you had a gain, I believe, on your green coffee costs? How big was that gain because I think Vince said in the prepared script, he reiterated the comment that the year-ago period was like the best coffee profits in company history. How much of it was just like a one-time gain on green coffee positions? And then final point, I don't know who want to take this one, but you didn't make any comments on weather. And as regards coffee, I would think -- I'm a little surprised that you didn't, perhaps, because it's one of the warmest on record. Maybe just give me some thoughts on that, if you will.

It's Mark Belgya. In terms of your first question, you're right, we did recognize the benefit of that, but if you would go back and check the transcript, we did not disclose that. We typically don't quantify that kind of a benefit to the plus or to the negative, but it’s clearly contributed to the strong quarter last year in coffee.

David, this is Richard. I would like to blame it on the weather, but I can't really say that, that is a factor. We really don't know. It may have some impact on it, but we really don't have a way to measure that from year to year so -- although it may have had some small impact.

But do you think the impact would be small? I mean, other companies, we've seen fairly massive impacts because of the weather. So -- I don't know, I'm somewhat tempted to say that this is somewhat significantly a weather-related issue, but I don't know. I'll leave it there.

Well, David, I think it is fair to say that some of our Southern customers' volume has been affected because of weather patterns. Snowbirds haven't gone south. Some of the more comfort foods are not being consumed. But as Richard indicated, maybe it is a material impact, but we just did not believe that, that's the issue that faces us.

Our next question comes from Alexia Howard with Sanford Bernstein. Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division: I just wanted to pick up a little bit on Ed's question on the channel -- the alternative channels. And really, I'm thinking more about the emerging channels not specifically Walmart, the dollar stores and so on. First of all, in terms of the weakness in measured channel volumes, do you have any view as to what's causing that? Is it the restaurant sector picking up? Is it this channel mix shift that's the primary driver there? And specifically, how are you addressing this channel shift with the dollar store opportunities, particularly, given that you are so heavily dependent on the Walmart side of things.

Alexia, this is Mark Smucker. I'll start with the general comment on just the total non-measured channels. If you aggregate in coffee our total business, our share performance in coffee is slightly better than you would see in the measured channels. And particularly, dollar has been strong. And in other areas of mass, besides Wal-Mart, we've had some strong results as well. So I think your assessment is fair. Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division: And in terms of your dollar store strategy, is that something that you're very focused on now? Is that something that you're pushing?

Alexia, this is Paul. And yes, a dollar store, obviously, is an important part of our mix, and we continue to look at different products that would fit that channel, and we'll continue to do so as we go forward.

Our next question comes from Chuck Cerankosky with Northcoast Research.

Any sense why the baking mix performance was so much stronger than the others, even though it had a sizable price increase? What might be a -- of particular note there?

Yes. Hi, Chuck, this is Paul. A couple things happened in baking. First off is we had a great -- a lineup of new seasonal items and new products that launched and did very well during that time period. We had great displays with our key retailers. There were more bake-centers than there were last year. So those are some of the key reasons. In addition, from a pricing perspective, we really didn't take price on cake, and cake was a key contributor to some of the growth in the category.

So it was mostly in flour, price increases?

We had flour. We had frosting. We had some of our other flanker items on the baking side of the business that we did take the price up anywhere from 4% to 20%, depending on what product line we're talking about. We had a very good quarter in baking.

Looking at private label, the share loss you saw to that broad competitor, was it concentrated among various retailers? Or was there a mass consumer run towards private label?

Yes, well, it varies by category, but the primary driver was one major retailer on oils and coffee. But I mean, if you look at it across maybe an all-outlook view, clearly, there was some private label growth during the 12-week period. But it was primarily affected in the 2 categories I referenced, so coffee and base oils.

And specific to 1 or 2 customers.

We'll take our next question from Andrew Lazar with Barclays Capital.

I'm just -- I guess, I want to explore a little bit if you're generally pleased with sort of the overall process of the pricing protocols that you use in coffee. I ask because I know a couple of quarters ago, you talked about a -- beginning sort of a price decline in process in coffee, and yet we have had a couple of quarters still where [indiscernible] costs have been a lot higher. So obviously, there's been a little bit of a mismatch there. And I know at the time, there was a discussion over whether this was just the protocol and being transparent with retailers or if there was some greater concern around volume elasticity and such. And I asked because going forward, the discussion around putting some price back in the way you normally would, it just seems like normally, a category like this lags pricing on the way up and then lags in terms of pricing in reaction to costs coming down on the way down. Different geography and such, but Sara Lee talks about -- in their coffee business about being able to sort of hold on to 70% of the pricing that they've taken. Granted totally different geography, don't even know if that's going to be accurate or not at the end of the day, but you see what I'm getting at, the protocol typically has worked to a certain way, and I want to get a sense of whether -- do you think that's changed? Has that changed in this most recent round? Or has it just been at the extremes of costs have just been sort of anomalous, if you will? And then I got a quick follow-up.

Andrew, this is Mark again. I -- your assessment, I think, is right on. I can let Steve speak to the foodservice coffee side because that is a different channel. But you are absolutely correct that there is a lag. We do try to be transparent where we can, and given the moderation of the costs -- I mean, if you just look at the trend line over the last several months, it has been moderating, but it's been moderating slowly. So that's the reason for our comment that we will look at specific segments and possibly look at some targeted spend, but a broader price increase would be likely as we get through the continued higher costs and into the beginning of the fiscal year.

And then I'd like to speak to the -- our experience, just so far with Sara Lee, obviously, it's only been a short period of time. But foodservice coffee is very different in that we don't have key promotion price periods like you do in retail. We don't have a Thanksgiving ad, we don't have an Easter ad, so it gives you a lot more flexibility in pricing versus the market, pricing versus competitors. So we're -- and it allows your coverage strategy to be very different. You can coverage -- you can cover for the lowest-cost product rather than cover to protect key promotional time periods. So we got a lot of learning from Sara Lee on that, and our team is all over it. So the dynamics will be different in foodservice.

Thanks. And then as a follow-up, I -- Richard, I know that you guys went through a lot of the discrete things that impacted sort of volume in the quarter, whether it be retailers destocking and obviously, consumers adjusting to higher price points and things of that nature. Even aside from all that, we have seen, obviously, some pretty weak industry data from a volume perspective. And in asking a lot of the various companies that have reported and what have you, it still seems like there's a lack of either understanding of what's made it so weak or the -- and definitely, the feeling that as long as consumers are still eating, which -- best I can tell, that's the case, that there's this general hope and expectation that volumes will rebound some as we go into the ensuing quarters just because it sort of has to. But do you have any better understanding of what's gone on in the data in the last couple of months? I know it's maybe hard to get at, but I want to make sure to ask you if you had a better read on that because have not gotten a really great handle -- or a lot of the food companies don't seem to yet have gotten a great handle on it in terms of being able to explain it.

Well, I am not sure I'm going to give you an insight that is a eureka, but just from...

Trying to put the pressure on you in a way.

But some of the information that we have, basically, as you know, food commodity costs have been up in the last couple of years, greater than historical averages in almost in any period that we've measured, and it's a very tough economic time. We've seen people being willing to spend $0.65 a cup for a K-Cup of coffee, but then they'll -- they're buying private label brands because the price is best. People on food stamps have gone from 25 million 4 years ago to 48 million today. So I think there's a little bit of industry sticker shock on -- across the industry, but I think I relate it a little bit to the fuel in terms of gasoline. When gas prices went to $4 a gallon, everybody stopped driving for a while until they got used to the fact that the new norm was $3.50 to $4, and then they started driving again. I think it's taking the consumer a little while to adjust to this and -- across the industry. And I think this new inflation rate will be there for some time, and the consumer will adjust. That being said, some specific data that we have seen is that the average grocery shopping cart this year is $11 more than it was last year for their average shopping cart, and the consumers putting about 10 items less in their shopping cart because they can't afford to put more than that in, in terms of -- because of the inflation rate. So I think it's something that we're going to -- all as an industry have to adjust to over the next couple of months. And -- but I think the consumer will adjust.

We'll take our next question from Scott Mushkin with Jefferies & Company. Scott Andrew Mushkin - Jefferies & Company, Inc., Research Division: I kind of want to poke back at this volume, and I know you've shared on the coffee side 1% to 2% inventory reductions. But if I go back to the summer and last spring when prices were going up, and you guys were surprised how the elasticity was much better on coffee, and I think we commented at the time that we've been with retailers that said and basically showed me their coffee stash of Folgers ground. Now we're seeing to be -- even though the price that we track at retail, which I know is not necessarily an official number, but been stuck here at -- for the small one-pound equivalent Folgers is about the same price as about July. Now we're seeing with the green coffee costs coming down, all of a sudden volume is being much more challenged. I mean, how much of this is just a cyclical nature of this business that maybe you guys are just underestimating a little bit? Maybe you can respond to that.

Yes this is Mark Smucker. I think that the couple of comments in the period I think you're referring to is, in many cases, the coffee increases may not have been fully reflected at that point. And I would say, we believe that it is less a cyclical issue than it is, a, they hadn't been fully implemented, and b, and probably most importantly, we have now crossed certain pricing thresholds that the consume -- back to the sticker shock comment that the consumer is simply not willing to pay or perhaps, if they're trading down. And in some cases, they may even be using their coffee more conservatively. In other words, brewing a smaller pot or brewing weaker coffee, what have you. We think those are probably what's driving the trends. Scott Andrew Mushkin - Jefferies & Company, Inc., Research Division: Yes, I mean, just from our data, it looks like those thresholds are passed in early summer last year. And if anything, with the employment improving, it's kind of the comments you get used to things over time, it seems like consumers will be used to some of these prices 6, 7, 8 months later. Okay, so that's good. I also had a -- so that's more of a cyclical issue. My next question has to do with kind of more of the secular nature of things in 2 of your core categories, peanut butter and coffee. Obviously, we've had new entrants into the peanut butter category. And now in a lot of stores, you see 4 brands plus a private label. So I wanted to understand how much you think that's going be a problem going forward. And then also on the coffee side of the business, K-Cups have obviously been a good growth vehicle for you, but we've also seen Green Mountain get pretty aggressive at least on retail price dropping their coffee price to the -- the K-Cups to your Folgers price. And I was wondering if you think, and especially with the entrance now of Starbucks, we should expect any kind of slowdown in your K-Cup business?

Hey, Scott, this is Paul. Regarding the peanut butter comments, we have seen some competitors come into the category. I would say that while they are still doing pretty well, they're not -- we're not losing a whole lot of share to them at this point, and we wouldn’t anticipate that actually going forward. So -- but we are watching very closely and, clearly, they are taking share from other players.

And then, Scott, this is Mark again. On K-Cups, we're still very optimistic, number one. And then we don't think over time it's going to continue to grow at the rates that it has grown. But we have not seen a slowdown in our growth based on anything that either one of our competitors are doing. I think on the Starbucks side, it's still very early. They've done a very nice job of getting distribution, but we have not seen any significant impact to our business. And so the bottom line would be that we would continue to see that we are all collectively growing the pie, and that we would continue to see growth in the category.

Scott, this is Richard. Going back to your original question and your assumption that the adjustments on pricing in the categories does -- would've -- you would've seen that maybe in the fall or the last summer, you have to remember that a lot of our promoted items are -- we're big in Fall Bake. We have a very good Fall Bake in most of our categories. And this is the first time, at least since a year ago, that people have seen these new promoted price points, which were substantially higher than last year. So because of primarily peanut butter and coffee, which are 60% of our business, which had the big price increases, that wasn't seen in our categories until this Fall Bake period.

We'll take our next question from Farha Aslam with Stephens.

Focusing on coffee, you had taken a 6% price decline coming into the Fall Bake season to get your pricing aligned for the fall promotions. Usually, the Fall Bake is a time for branded players to really shine. So we're really surprised that private label took some of your volume. Could you just discuss the competitive activity that's going on in the coffee category? You've had new entrants with Starbucks now being an independent force in this category. And private label seemed to play a bigger role in a Fall Bake season. Could you just discuss how you view the dynamics going forward in that category?

Sure, Farha. It's Mark again. I guess I would just start by reminding you that our cost is still -- in terms of absolute pricing, we're still up in the high 20%, 25% to 30% range versus the prior year. So although we did take a price decline, it may not have been quite enough in this particular case. But having said that, we did have good, again, promotional activity. I really think it comes back to the absolute price in both on a promoted and un-promoted basis and managing the gaps that we have both on the lower end of the category, as well as the premium segment. And so where we did do a good job managing those gaps, for example, Dunkin', we've seen growth. And on the lower end of the category, the same comment would hold true. The fact that we're participating in every segment of the category has been very good for us, and so although it hasn't entirely offset, it clearly has not offset the declines in the mainstream segment, we're doing the right things in both the opening price point and the premium end of the segment.

And the core, is there anything different you're going to do to address kind of the weakness in the core going forward, aside from just increasing promotional activity in the near term?

I think it goes back to the comments I've made, I guess, a couple of times earlier on the call, just targeting specific segments and then, as costs continue to moderate, dealing with that from a pricing standpoint more broadly.

And Farha, this is Vince. I would add, again, we are pulling all levers to take a look at what actions that we can take, including our supply chain initiatives, particularly in coffee, are coming to realizations this next year. So there's a lot of activity going on to help drive the core Red Can business. We are going to continue to invest in it.

Okay. And just one quick follow-up. I know you're, right now as an organization, dealing with commodity and pricing and promotions, but in terms of M&A, particularly international M&A, could you just comment on any progress there?

Well, there's been progress. As we've said, we've looked at China as a possible investment area, and some of our key teams made several trips over there. And we have several irons in the fire and nothing to report yet, but we're getting much closer.

Our next question comes from Ken Goldman with JPMorgan. Kenneth Goldman - JP Morgan Chase & Co, Research Division: There seems to be a consensus opinion in my read that 2012 maybe won't see a return across the food industry to the heavy promotional trends of a couple years back that didn't really work. But I'm starting to wonder if this isn't a bit optimistic, and I'm hoping to get your thoughts there because we're seeing some deeper-than-expected promotions in your categories, as you mentioned. And we've now heard at least 4 food companies in the last month talk about challenging volumes, right? So if volumes are poor, and competitive activities are increasing, why would we not anticipate a return to some of the maybe less rational categories across the board? Right? Just so companies can make sure that their product actually gets sold. I'm more curious about your thoughts across all of food and any insights you can provide to your own categories as well, but just hoping to get some color there.

Well, this is Richard. A couple of things. We look at -- obviously, we're concentrated on our categories, and we still think the fact that we have the leadership position in most of the categories that we're in, we're still going to take a responsible position in terms of how we price and how we promote. What that usually -- happens is that you might suffer a quarter or 2 because you haven't dealt down to a level that is unprofitable or doesn't build the category. But I think, at least from my colleagues that I know in the industry have recognized that, historically, that if they do over-promote, that's a short-term fix. And the industry's -- at least the leadership that I've seen in the industry has taken a position that brand building is the best thing for the industry. And I guess I'm optimistic that you won't see an across-the-board race to the bottom. I think they're very brand-oriented, and I think we're going to continue to see responsible management of those brands. And we're going to do our part to do that. Kenneth Goldman - JP Morgan Chase & Co, Research Division: And then your marketing spending was down this quarter by a healthy amount as a percent of sales. I realize this was expected. But how much of a problem was this, in your view, in terms of driving units lower than maybe what you anticipated? And how much do you think it needs to go up next year? I know you talked about some negatives and positive next year, but I don't think you mentioned marketing, unless I didn't happen to hear it.

Hey, Ken, this is Mark Belgya. Just to clarify, you're right, as a percent of sales, it was down, but it was actually up 4% for the company in terms of dollars. I think we've been pretty consistent throughout the year when we talked about marketing spend that -- because of the inflationary impact with the items, the top line we would not expect to keep a percent of sales. But the key point is that the marketing spend this year we feel is at a level that clearly allows us to do what is necessary for each of our brands, and the level this year is pretty consistent to last. And I don't think we would necessarily -- certainly wouldn't see a decrease in that. We’ll have more to talk about later this summer when we get the specifics, but we -- the lack of marketing wasn't the issue. I mean, we had quality advertising on air during the period, have had that throughout the year. A lot around social media, we've been able to increase the percent of our marketing dollars sold on that. So just looking around the team, they certainly can add, I think, that most would say we're quite comfortable with the spend levels.

We'll take our next question from Akshay Jagdale with KeyBanc.

The first one is for Vince. Just on the partnership with Green Mountain on Vue, can you just help us -- walk us through your thought process on how that came about and most importantly, why now? So I believe there is some other brands, larger brands, that had the -- like you, had the option to wait and have decided to wait for a little while. So why now? And what makes you so optimistic about Vue? And do you think it's going to be incremental to the current generation K-Cup business that you have?

Sure. Well, first of all, we've had an outstanding relationship with Green Mountain Coffee Roasters that we entered into a couple of years ago. And if you have followed them and their strategy, obviously, its -- this new technology or new platform is providing an additional benefit to the consumer relative to buys of brew, temperature control and a number of offerings that are within it. As we had said from really the day that we acquired the business, we knew that we needed to participate in the single-serve area, and we did an extensive review at that time and decided to partner fortunately. And we're -- clearly, I think we're riding the right horse, so to speak, partnering with Green Mountain. So why do we think it's good? We think that if you look at the others in the industry that have not been successful, buying some very large coffee companies, clearly, Green Mountain is the one that is the apparent winner. And so again, we're very excited about the existing relationship and what this relationship means for us long-term on the new platform.

But just a follow-up on that, so -- but why now? I mean, I'm just -- we don't know the exact details of when these conversations start and end, but Starbucks, for example, have yet to sign up, and so has Dunkin'. It was good to see -- I think, it's the right decision for you to sign up because I do believe it's a good system, but I'm just trying to understand from your perspective, why did you think now was the right time to get into that system?

Akshay, this is Mark. It really comes down to the fact that there's a leader, and we're the leading coffee brand as well. And we think that the partnership between the leading platform and the leading branded coffee manufacturer is a win-win, so I think that's the reason.

Okay. And then just another one on coffee in general, more longer term, and really what I'm trying to get at here is, long term, you don't think fundamentally there's any major shifts in consumer behaviors. I think that's what I hear, so I'm trying to address that. So the question is, you said the issues that related to volume in the quarter were primarily, in your opinion, related to the price point on your Red Can business. And so one, am I -- do I understand that correctly? And if I do, why is the price point -- the absolute price point so important in that category and not as important, I guess, in K-Cups and your lower-level value brands? Is it just a function of the value of the brand itself and how much you're spending behind it and perhaps, you need to spend more on it? Or -- I'm just trying to understand why has the absolute price point seemingly impacted your core business more so than the high and the bottom end.

Akshay, I think you're correct in your assessment of just the Red Can business. It is, we believe, absolute price points, and when you start to -- in the mainstream segment, you start to look at prices that get over $10, that seems to be the place where consumers become more conservative. I -- we would be hopeful that as prices come down, you would -- and I think we've seen this in the past, consumers will migrate back to that more premium segment. So for example, we're seeing consumers now either buy our opening price point, our private label or our smaller can of the same product, and so we would hope to see, as prices come back down below that double-digit number on a consistent basis, that there would be a shift back to that mainstream category.

And what happens if coffee prices, longer term, are on an upward trend? Does that just mean that you need to innovate a bit more in the Red Can business maybe to smaller items with lower price points? Or [indiscernible] kind of come…

Yes. I think if coffee prices go back to where they had been and stay there for a significant amount of time, you're going to see higher prices across every segment of the coffee category. And if that's sustained, the expectation will be that the consumer would, over time, adjust to that. Now the only -- the -- very quickly, the last comment I would make is we're still very focused on innovation. And we've got a lot of things in the hopper. We've over-delivered on our own objectives in terms of new products in multiple segments of the coffee category. So clearly, that mainstream core Red Can business is important as it's the key area, but there's so many other pieces of innovation going on that we expect that we will continue to see significant growth from new products as well.

And just one last one. So with coffee prices where they are and knowing the complexity of your portfolio, do you think you can adjust the price point on the Red Can business and still, longer term, be at profitability levels in terms of percentage margins that we've seen historically in that business?

Absolutely.

Our next question comes from Jason English with Goldman Sachs.

I know you're running late, so I'll try to keep it brief. A couple of your comments left me a little confused, and maybe I misheard them, so correct me if I'm wrong, but I think I heard you mentioned that in unmeasured channels, beyond sort of the FDMW stuff we're able to track, your market share was better. But earlier on, you had said that volume was worse or maybe equally bad there. That seems very inconsistent with what we're seeing and hearing out of channels like club and dollar. So can you help me understand that?

Yes, sure. Let me get maybe one layer down. Mark Smucker indicated earlier when you look at like the dollar channel, we are doing very well in those channels at this point, primarily driven by coffee. If you look at the club channels, specifically, due to some pricing that occurred on our peanut butter this past year, we did lose a significant portion of a major club customers, and so that has affected our second, third and the future quarters. If you look at another major retailer that we spoke to earlier, that customer being a disproportionate amount of our business, we have been challenged. So that's, I hoped, to clarify the -- maybe the conflicting remarks or the conflicting interpretation there.

So it sounds like you lost share in unmeasured channels?

Well again, net-net, if you roll it all up, that could be a fair statement primarily because of the peanut butter and the major customer.

Okay. And then the last question, and I'll pass it on. Inventory levels, you mentioned that retailers worked it down last quarter. They worked it down again this quarter. I'm sure they're all looking at the same coffee cost curve. We are and they're hearing your remarks about the potential price rollback in fiscal '13, so 2 parts for that: a, do you expect inventory levels to every -- in the channel to go even lower this quarter? And b, do you think they're unsustainably low and that we could actually get a boost in fiscal '13 once prices sort of stabilize?

I'm not sure that they could go much lower, to be honest with you, so we would hope that they would stabilize.

We've actually seen a little bounce back after the end of the quarter, where they reduced a lot right at the end of the quarter, and we've seen some sales in early February being better.

Our next question comes from Chris Growe with Stifel, Nicolaus. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: I'll also try to be brief here. My first question is a bit of a follow-up to earlier questions. But I guess I'm not clear on -- is the company changing the strategy in any way around or in reaction to this weakness in volume be it the way you treat new products or package sizes? Does it require that kind of change from the company in categories like coffee to better compete going forward?

In generally, no. But we certainly do look for special price points. Our opening price point coffee is one where we push extra hard because we know it was a value to the consumer. But in generally, our strategy remains the same. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Okay. So there'll be no change the way new products in the future will be? Would -- that is going to be more value-oriented, if you will?

Well, Chris, this is Paul, and I think if we look at our categories in the Consumer Foods side of the business, we always look at the different sizes, certain size, meet the need of the consumer better today than other days. And so we will continue to look at that when we launch new products.

Hey, Chris, this Mark Belgya. Just one quick add on that though. Just -- because I think I know your where your line of questioning is going. This isn't going to take us time and a lot of investment to do that. I mean, if you look across our brands and our categories, we have a variety of brand sizes to get -- whether you're focused on per-ounce servings or whatever that the consumer is focusing on, so this isn't going be a major shift requiring a lot of investment and time from the management team and team overall, that we just -- we'll just look at our current portfolio and adjust to quarter and take the course from that. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Okay, that's helpful, Mark. And then I guess back to you, Mark. A question just around debt paydown, given the strong working capital improvement that occurred sequentially versus say share repurchase, where you've got a lot of capacity. Obviously, the stock looks like it's under a little pressure today. Is there a preference either way here in the short run for the company?

Well, in terms of the paydown, to be quite honest with you, of our long-term debt, that’s not public, the private placements we've had, there really isn't a lot maturing over the next 3 to 4 years. I think it's about $300 million over the next 5 years. And there's fairly substantial prepayments that, economically, it does not make sense. Now we did take advantage to pay down our revolver during the quarter, right at the end of the second quarter I guess it was. So that's the completely opened $1 billion revolver. But I don't think you'll see us really move any cash to pay down any of the debt in the near term. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: So it seems that we've opened a lot of opportunity for share repurchase then in the short run.

Well, we've got a liquidity-check on our strategy, whether it's growth for the company or return back to the shareholder.

Our next question comes from Rob Dickerson with Consumer Edge Research.

I’ll keep mine quick too. Just a quick follow-up from the questions on cash. I mean, just to -- the point it seems like GAAP net income was down 11%, CFO was still up 9%. Beginning of the year, you got the $450 million in free cash flow. Obviously, what's going to be viewed today is the drop-off in volume, but at least from what I'm seeing so far, I mean, it doesn't look like we should expect that $450 million free cash flow projection to be changing for year end. Is that right?

Well, it would change a little bit, it would decreased a little bit because of -- I mean, [indiscernible] EPS effect. But I'll tell you, we still think that it's within shouting distance. We lost about $35 million if you just equate cash to the income, but we still think $450 million is possible. We also generated a lot of cash from working capital improvements this past quarter. Our teams are focused on that as well. So for now, I would say it's probably $400 million to $450 million, and we're still hopeful to get to the high end of that.

Okay, great. And then as we look into next year, I'm assuming that there's nothing that's changed with respect to your CapEx plan, I mean, such that X percent is coming from special projects.

Yes, there won't be anything significant. The only -- and I wouldn't even say it's overly significant, but it is worth note, is that obviously with the acquisition of Sara Lee business, the capital requirements related to the equipment are a little higher, but we would still not see a significant change in our CapEx spending from what we've talked about in the past for next year.

Okay, perfect. And real quick just on just coffee, I guess just frankly, do you or do you not get a profit mix benefit from K-Cups?

Oh, K-Cups? We -- the only thing we've commented earlier that it is not dilutive. It's primarily equal to our overall corporate average.

Okay. And then lastly, just kind of, I guess, to round up all of the comments on pricing today on coffee, I guess, the final question that I just have is we -- basically, end of January, we're looking at the same commodity curves that spot coffee actually did lack from the price a year ago. And I'm just curious, if there is a main culprit or more than one culprit who have essentially discounted or raised prices less than you did in the past quarter, then what's the kind of quick answer to why wait to until early fiscal '13? Is there a possibility that we would see pricing coming down actually in Q4?

Most likely not. But there could be as Mark referred to earlier, some targeted promotional activity. But no, there probably will not be any pricing action in the fourth quarter.

Our next question comes from Mitch Pinheiro with Janney Capital Markets.

I'll be quick. Did the Dunkin' K-Cup launch have any impact on your Dunkin' bag business that you can measure?

No.

Okay. Will Vue be priced -- or I should said say, will your margins be similar to your existing K-Cup business?

We don't know yet, and that's -- probably have to ask Green Mountain that question.

Will Vue -- will your product in Vue be in grocery only? Will you -- or where is it launched first?

We'll provide more details on that next week because it's so early in the launch in terms of the test period, et cetera. We're going to -- we'll work with Green Mountain to convey as much information as we can.

Okay. And then the last question. Just based on what you learned in this quarter, any changes to Easter, spring -- the spring baking season?

Yes, Mitch, this is Paul. We have actually some pretty good plans in place for Easter. At this stage in the game, we're probably not going to make any major adjustments, but we feel it's in decent shape.

And we have a follow-up question from Eric Katzman with Deutsche Bank.

Regarding next year, Mark, the CapEx, you're higher this year because of the -- building of the new plant. Wouldn't CapEx roll off next year pretty significantly? And then also, I don't think you've been that specific on the year-to-year productivity savings that either you're going to get this year versus next. I think you gave like an F '14 or F '15 kind of longer-term target, but perhaps you could kind of touch on those 2 issues.

We'll be glad to. First of all, in terms of CapEx next year, we definitely will see a decline, probably somewhere in the 20% to 25% reduction from the roughly $270 million we're expecting this year. And a lot of that has to do with the completion of both the projects in New Orleans, as well as here in Orrville. And then in terms of -- I'm sorry, the second part of your question again, Eric?

Yes, long call. Productivity savings.

Yes, yes, yes, sorry. Yes, in terms of productivity, just to ground the listeners, we did say that we're going to have approximately $70 million in total savings when everything is said and done, and actual will be in full effect in fiscal 2015. The current year, we've got about $25 million of benefit. Obviously, that's been a contributor to trying to offset some of the effect to the commodities. Although we'll be more specific when we talk to you in June, we will see that number go up a little bit next year, and we'll have completed our coffee work in New Orleans. We have completed our Canada pickle and the plants closing there, so we'll get some additional benefits from that. And then the rest will sort of step up as we bring on the lines and ultimately move everything into our new plant here in Orrville and again, just giving the full effect in 2015. So there'll be a little bit above the current $25 million that we had in this year.

Okay. And just one last one, I guess, to either Richard or Vince. When some of your competitors announce results in the next couple of weeks, so Kraft, obviously, in Coffee and ConAgra in oils and I suppose Mills, at some point, maybe they'll touch on it next week in bake mixes. I mean, do you really expect them to kind of paint the picture similar to what you're saying in terms of category volumes? I mean, it sounds like you gained share or kept share stable in dollars but lost in volume. So they're going to -- do you think they're going to show, in some of those cases, the opposite, like volumes better and dollar share losses?

I really don't know what they're going to say. Obviously, it's up to them. But we know what the market said and what it meant to us. I would think they'd be looking at the same data. Before we end the call, I just wanted to thank everybody for your questions. They make us better. I also wanted to emphasize that we remain confident in our strategy, and we're actively addressing the current challenges that we face. We know where it occurred and why, and we're taking the appropriate steps to make the next quarter and next year solid. And we remain confident in our long-term projections. So we look forward to seeing everybody next week at CAGNY, and have a great day.

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