THS
#Josh, this is <UNK>.
It's a great question and we've had conversations here about should we slow down the integration.
What we've seen is that really the challenges on the sales front are where we perhaps took it too slow.
So our approach coming into it on the sales team was to first do no harm.
And so our goal was to make sure that we didn't lose customers as part of this transition.
And we are very pleased that, in fact, the customers have been quite positive about the program, the execution.
And on the systems side the transition of the plants to TreeHouse SAP has been transparent to them.
We have not heard a single comment from the ones we have done thus far and touchwood we expect it to continue that way.
The thing that we didn't do is we didn't start driving the sales team towards the growth that was there.
And so that was where we lost some of the opportunities or left things on the table that we could have picked up and this transition allows us to do that.
So as far as integration tasks remaining, the big piece of it is really the TSA and continuing to carve out each of those plants that we've acquired and bring them onto our systems.
And that will continue at the pace and on track that we have just because it's going quite well, we haven't had impact to customers or to the operational teams and we need to get it done by the end of January in order to comply with the TSA that we have with ConAgra.
So that part will continue.
And I think the rest of it and bringing the teams together, in every case where we have unified the customer service organization or the condiments team as we get things together and provide certainty to the teams we see better performance.
And so this allows us to continue that.
So we've done three plants thus far.
We have not seen ---+ we track each of the metrics, so our fill rates, the service levels, etc.
we track those regularly with each transition and have a full team on-site to do that.
In many cases, we are working with the same teams that ConAgra worked with a few years ago to go through the same transition and without exception they have all been incredibly complementary of this.
To be perfectly honest, we had a lot of nervousness from our legacy Private Brands about this transition because they had been through some really rough transitions.
And as you say SAP is not always heralded with a lot of enthusiasm, but I would say at TreeHouse people, we know what we are doing, we've done this before and we've been able to do it without impact to customer or two operations.
And we fully are committed to having a team that continues to do that.
And so we've got folks in our next plant today getting ready for the transition at the end of this month, teams are trained and customers are notified and we are taking orders right now on the new system.
So we feel good about it.
Every single one of these is different, which is why the team enjoys what they do and is incredibly engaged on making sure that this works for customers.
Hey, Josh, this is <UNK>.
It's all about the top-line volume and establishing not just simply shipments but programs on an ongoing basis with several dozen of the largest customers who account for a disproportionate share of our growth opportunities and our profitability.
And those programs will first lead to better promotional and merchandising opportunities, but then they will go beyond that to joint business planning, to innovation as you've seen in coffee, as you've seen in aseptic broth programs and so that is the issue.
I would point out as <UNK> mentioned at the syndicated channels now, particularly in categories like snacks, are not the definitive data ---+ their data does not define the totality of the market.
So we will continue to see growth outside of those channels, in particular on the premium and the better-for-you products.
In a nutshell that's it.
I thought was we would start the year with a negative year-over-year volume trends in Private Brands which we did and by the fourth quarter we would be leveled out.
I think we are going to finish just slightly lower than being leveled out.
And 2017 and 2018 were based on our projection for 2016 as a base.
So basically that this was going to be a relatively flat year, we may be down slightly in 2016.
So that's where a bit of the miss is.
But that would be the new base is being down just slightly.
It's not that big a miss, <UNK>, in terms of exactly how we had because we were progressing better in the margins.
So from an operating income standpoint we weren't that far off.
We mentioned in the first few quarters how we had I think eight straight months of year-over-year improvement in margin despite the sales shortfall.
But we didn't quite get to the sales number we were hoping for and at this point I think we will be down slightly as opposed to flat to our expectations.
I don't have as good of data on that.
But I would say it was probably slightly more intensified in the Private Brands because it got so much wheat and durum-based products and those commodities were pretty favorable for a good part of this year.
So I think their pricing has a little bit more competitive.
I think you'll see the same dynamic will be on top of those price changes as we go into next year.
And I don't expect it to be an issue, it was just an observation in terms of what's happening on the price mix.
That's right.
This is <UNK>.
I think that it is implied in the customer communications but it's not been a direct request or demand.
And what we see is if you look at the full array of the top several dozen growth-related customers and the various categories that we have, we had to create centers of gravity that were located in individual aisles.
So condiments now has when you break, get into it it's got dozens of product categories that everybody used to sell as a part of the whole thing.
Now they've got a dedicated business team and you can offer not a mayonnaise program, not a mustard program but in fact a condiments business plan and that will be the big benefit.
Operator at this point we will take two more calls.
I think it's primarily executing better against plan.
As I said as I look through the list I'm not seeing lost business to competitors in private label.
What we seem to be seeing is lost business to either branded activity or just plain not getting the same activity we get in the past in terms of what we are trying to accomplish with our particular product on the shelf.
And we believe the renewed and more focused sales effort will help drive that incremental sales volume we need to be more effective.
We will look at all of our categories.
I think we've always done that.
Frankly, we said in the past if you look at the legacy business the canned soup was not necessarily all that attractive.
And pickles is a base category that shows little growth.
And I think the Private Brands brought to us a lot of categories, some of which look like pickles or canned soup and others that have the opportunity to look more like a coffee.
And so each portfolio has its pluses and minuses.
And just as we look at plants, as we look at infrastructure, we look at product categories we will evaluate all those to see what fits best in our portfolio and what might not fit best.
But at this point we don't have any decisions made.
This is <UNK>.
Let me put this in context.
The next President of the Company will be the fifth and we have over the last decade had an evolution that as in every instance the incoming President has refined and improved our strategies and that includes the one, Chris, who just left.
What we would expect in a new President coming in is someone who understands the current strategy, understands the marketplace and then begins to develop an understanding of our capability and our organization and finds ways to grow this business in the marketplace that faces us.
And we know that that marketplace has evolved in extraordinary ways from the time we started with pickles and non-dairy creamer powder and now have a leading position in over 26 product categories, 23 of which we are first and the other three a close second.
So it will be someone who is capable of managing a business of this size.
I think we will find extraordinary interest, both within the Company and without.
And we will improve in every instance.
Yes, so that's a great question and I can certainly wax poetic about it for a long time but I will keep my answer brief.
I think it is certainly true that we see our customers periodically shift their approach to private label and how they use it in the store, in some cases as a profit driver and a growth engine and in other cases as a brand price fighter.
But what you see, especially if you look outside of the typical scan data that you see in Nielsen and IRI, you see a lot of the growth in the retail market right now is in places like Aldi and Trader Joe's that have a disproportionate focus on private label.
And so I think the consumer trends towards private label persist and their willingness to try new products and to find ways to save money in order to be able to spend on other experiences or items will remain.
So we feel pretty good about that.
And while I think you will continue to see changes in how retailers think about the role of private label in their store, the real underlying growth pattern is really towards those who have used it as a strategic differentiator to fight against both competitors and online retailers.
And I think that will be the core to their success and ours.
Thanks everyone.
We'd like you to note that our annual Investor Day is scheduled for Monday, November 14.
It will coincide with the Private Label Manufacturers Trade Show in Rosemont, Illinois.
Registration closes tomorrow.
Contact <UNK> for details if you'd like to attend.
And we hope to see all of you at our new TreeHouse booth on the convention floor that week.
Thank you again.
