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#Yes, very pleased to say it's the latter.
Grain merch will have a quarterly impact year on year, but if you look at the overall business, the fundamental change in the margin is because of the business structure.
And the improvement you're seeing this year is primarily driven by the fact that we're seeing ---+ excuse me, 6% year-to-date growth on our focus six platforms, which all have higher-than-average margins, higher than segment average margins, higher than Company average margins as well.
And combine that with the cost savings initiatives Compass in ---+ or sorry, Catalyst and Century that we initiated last year, we had some benefit to C&F as well.
So very much a substantial and sustainable change in the margin structure for that business.
And this year similar, <UNK> talked about his business increasing margins by over 100 basis points.
We'll see the same thing in our C&F business this year.
No, I think that's a fair way to look at it.
I think that is a very fair way to look at it and we'll still see good margins because of the dairy pricing but maybe not as high as they are right now and we expect our growth to improve.
So we think about it, <UNK>, in the following terms.
We think that a sustainable business model needs to have both margin expansion and top line growth, so we're very ---+ as we've said many, many times, we're very focused on both.
Clearly, we acknowledge that the bar is higher now than it used to be on expectations for margin.
And we've ---+ we're addressing that very diligently through HMM, which we've had going for many years and the many other restructuring initiatives and other cost savings activities that you've seen us initiate over the last several years.
So we're very highly focused on the margin piece and you're seeing that this year with good gains and we expect that to continue as we go forward.
But the additional part for us is that you've got to have top line growth and so we're very focused on innovation and being responsive to the consumer by keeping our core brands relevant, advertising that works, and to drive growth.
And where we're getting that formula right, we're seeing good growth in our core categories.
So for us, it's finding that balance of both.
We think that's the key to sustainability in this environment and in particular, the focus on innovation and Consumer First, we think, is critically important in an environment where consumer attitudes and values about food, as you guys all know, are changing very, very rapidly.
So that's really how we approach it.
No.
Venezuela is 0.1% or 0.2% of our sales, so very small.
It will be immaterial.
Good morning.
Yes, it's the latter.
As we ---+ as the years unfolded, in the fourth quarter, we're still going to benefit, obviously, from strong HMM.
But the merch timing that we talked about and particularly, what we're lapping a lower merch period last year with higher this year.
The inflation which is actually the single biggest factor because last year, Q4 was our lowest inflation of the year.
This year, it's our highest inflation of the year.
Last year is really when, in the fourth quarter, is when dairy and grains came down and while they're still down, they're at decelerating more so we're lapping that.
And we have continued inflation in our manufacturing, logistics, sugar, nuts, fruit, eggs and obviously, I'd say more broadly just in the Latin American region, again, more broadly.
So it is very much an inflation story in the quarter.
The just phasing of it is different this year than last year with a low point last year and a high point this year.
I wouldn't read anything into it, as we look into FY17 and we'll share more full guidance with you for FY17 in a couple months.
But as we talked about at CAGNY, we are projecting 200 basis points of margin expansion by 2020 and we expect the majority of that [clout] to come through COGS and come through gross margin.
Okay, so ---+ well, let me, I'll answer the first one first and I can't really ---+ I understand the observation, <UNK>, and the concern that you might hear.
I can't speak for the industry.
I can only speak for us and clearly, we are very, very focused on product safety and product quality.
It's central to our mission and that's the kind of capability that we would maintain and actually build upon even in this environment because we just think that consumer trust is job one for us.
So ---+ but it goes to ---+ your question goes to the earlier question as well about what are we trying to do and we're trying to do two things.
We're very, very focused on margin expansion and we think we have a good line of sight.
And we've performed well there over the last couple of years.
We have a good line of sight on other things we can do to continue that good work but we're equally focused on maintaining the capabilities that we need in order to drive top-line growth.
And so we're preserving ---+ we've got a very strong marketing organization in CI, we've got excellent R&D and so those are very important things and our product quality organization has been maintained at a very high level so that's how we look at it.
I understand the question and I understand the concern but that is the sort of thing ---+ we would not compromise in that area.
To your comments on Yogurt, there's ---+ I don't have the numbers in front of me on how ---+ from what's come in and what's gone out over the last couple of years.
And <UNK> may have those and so there is a tremendous amount of new product activity in the Yogurt area.
Lots of them don't stick around for very long so it is ---+ there are a lot of them though and it's become a more competitive category but again, where we focus on the right innovation and the right renovation like expanding Annie's into the yogurt/dairy case and other yogurt innovation initiatives that we'll announce this Summer.
Where we have good ones, we're able to succeed because of the scale and the distribution power that we have, so we're confident that we can continue to grow there.
It's an exciting space and huge category globally.
We have very high capability and so we're just going to stay focused on the kind of innovation that will work in the category.
I can come back to you, <UNK>.
We can get some numbers maybe on how many have come in and how many have gone out but your observation that there's a lot more in Yogurt, I think, is correct.
I don't know if you want to add anything, <UNK>.
Hi, <UNK>.
<UNK>, this is <UNK>.
I think the mix that we talked about at the beginning of the year about reinvesting roughly half of our savings is still where we are at.
It is phasing a little bit differently.
As we said, I think advertising at some of the merchants are a little more back-loaded than we originally anticipated but for the full year, it will be in that same range.
And actually, obviously, we haven't completed our plan for next year so I can't give you an exact figure but you would expect that we are going to be continuing to reinvest some of those savings back.
And next year, we also expect to have a little bit more leverage from higher top-line growth to add to the margin expansion.
Yes, sure.
First off, our international business, in total, we feel good about where the top line has moved solid growth in developed markets really at that low single-digit level that will continue even if it's tempered a bit by some of the Yogurt pricing in Europe.
Encouraging acceleration in emerging markets that <UNK> took you through, which is both innovation, our execution and some pricing and as with other segments, we expect that to strengthen in the fourth quarter.
In terms of the margins, there's a couple things that are at play.
One is, obviously, Green Giant does impact our profit in international.
We sold the North American business, so Canada, you're seeing the impact of that and that's a low to mid-single-digit drag on the earnings for international.
The other you see, we mentioned this as a currency-driven inflation on certain products.
I mean, that's a long way of saying we have some transaction FX impact for businesses that we source across borders.
So for example, much of our Canadian product is sourced from the US so as the Canadian dollar weakens, that increases the cost in Canada.
We have the same thing across some borders in Europe and that has been a larger drag in the second half just due to currency movements and some hedge positions that we had and that's what you're seeing in the quarter.
It will continue into to the fourth quarter as well but if you strip out Green Giant and some of that transaction FX, the underlying growth, profit growth you're seeing in international is holding up quite well and that's what we would expect to continue to see as we move into 2017.
No, that does not include any transaction.
That's all translation FX.
Thank you for asking that to clarify.
The $0.08 is all translation.
